Saudi economy records sharpest rise in new work in four years

The Saudi economy is rebounding from a sharp slowdown that was triggered by the collapse of oil prices in 2014. (AFP)
Updated 03 December 2019

Saudi economy records sharpest rise in new work in four years

  • Headline seasonally adjusted Purchasing Managers’ Index posted 58.3 in November, up from 57.8 in October
  • Saudi economy is rebounding from a sharp slowdown that was triggered by the collapse of oil prices in 2014

LONDON: The Saudi economy recorded its biggest increase in new work in more than four years in November according to a report from IHS Markit.

The headline seasonally adjusted Purchasing Managers’ Index – a composite gauge designed to give a snapshot of operating conditions in the non-oil private sector economy – posted 58.3 in November, up from 57.8 in October.

“A bright spot was a quickening of overall new order growth, which reached its fastest pace since April 2015,” said IHS MArkit economist Amritpal Virdee.

The Saudi economy is rebounding from a sharp slowdown that was triggered by the collapse of oil prices in 2014 that led to many projects being shelved or delayed. The stabilization of oil prices, helped by the ongoing production cuts orchestrated by OPEC and Russia, has boosted spending while at the same time ongoing reforms is making it easier for foreign companies to do business in the Kingdom.

Employment among non-oil private sector companies rose in November, but the rate of job creation was marginal and subdued by historical standards. and the highest in over four years, IHS Markit said.

Firms across the non-oil private sector scaled up their purchasing activity to support increased output requirements according to reports from surveyed businesses. However, growth in buying levels eased.

Some evidence emerged of rising prices with the latest data showing the third increase in charges for goods and services in the past four months.

However, the rise in selling prices was marginal.

Overall input prices continued to increase in November, but the rate of inflation eased for the second month running and was subdued by historical standards. Finally, November’s survey indicated longer lead times on purchased items for the first time since July 2011, which anecdotal evidence attributed to insufficient stocks among suppliers

“Overall, the private sector economy is well-placed as we look forward to 2020, with the survey’s forward-looking gauge, the Future Output Index rising to a nine-month high on the pace of new product initiatives and more positive forecasts for underlying demand,” added Virdee.

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UAE central bank further eases liquidity measures for lenders

Updated 09 August 2020

UAE central bank further eases liquidity measures for lenders

DUBAI: UAE monetary authorities further eased liquidity measures for the country’s banks, enabling them to free up more cash to lend to companies and individuals affected by the coronavirus pandemic.

The UAE government in March launched the $69.707 billion Targeted Economic Support Scheme (TESS), which includes $13.615 billion provided by the central bank via collateralized loans at zero cost to all banks operating in the country.

Monetary authorities are “reviewing the existing thresholds of two prudential ratios: the Net Stable Funding Ratio (NSFR) and the Advances to Stable Resources Ratio (ASRR) by temporarily relaxing the requirements for the structural liquidity position of banks,” a statement from the UAE Central Bank said, as reported by state news agency WAM.

“This step comes as an additional measure encouraging banks to strengthen the implementation of the TESS and support their impacted customers in overcoming the repercussions of COVID-19 pandemic, the statement added.

For the NSFR, mandatory for the five largest UAE banks, lenders were allowed to go below the 100 percent threshold, but not lower than 90 percent, while ASRRs could go beyond 100 percent but not higher than 110 percent.

The purposal of these ratios is to ensure that long-term assets are funded by stable resources of funding, and their relaxation means banks will have more flexibility in managing their balance sheets.

“The relaxation of the two structural liquidity ratios aims to further facilitate the flow of funds from banks into the economy,” UAE central bank governor Abdulhamid M. Saeed said.

“The temporary relaxation of NSFR and ASRR will supplement the other measures CBUAE has taken under the TESS to mitigate the impact of the COVID-19 pandemic on private corporates, small and medium-sized enterprises and individuals.”

UAE banks have accessed about 87.2 percent – or $11.872 billion – of the Dh50 billion TESS support provided by the central bank as of July while 9,527 small and medium enterprises and more than 260,600 individuals have benefited from the scheme.