Saudi Arabia’s gross domestic product (GDP) rose 1.8% y-o-y in the second quarter (Q2) of 2021 as compared to a contraction of 3% year-on-year (y-o-y) in Q1 2021, a report said, citing estimates of the General Authority for Statistics.

This increase was supported by increase in oil sector (+8.4% y-o-y in Q2 2021 Vs +2.9% in Q1 2021), said Al Rajhi Capital, a leading financial services provider in the kingdom, noting that the non-oil sector declined (-6.9% y-o-y in Q2 2021 Vs -11.7% y-o-y in Q1 2021).

Further, S&P Global Ratings affirmed Saudi Arabia's A-/A-2 credit rating with a “Stable” outlook. The stable outlook indicates that an emergence from the pandemic and an improvement in oil sector dynamics, along with the country’s government and external net asset positions, will support the ratings. S&P expects the real GDP growth of the Kingdom’s economy to be 2.4% in the period 2021-2024.
 
Money Supply (M3) continued to grow in August 2021 (+7.9% y-o-y) to stand at SR2.239 billion ($596 million); while M1 and M2 increased 5.7% y-o-y and 5.2% y-o-y, respectively. As per the weekly money supply data by Saudi Central Bank, M3 may be lower in September 2021 than in the month of August.

Credit to the private sector witnessed a growth of 15.7% y-o-y (+0.8% m-o-m) in August 2021; while bank claims on public sector advanced 10.4% y-o-y (+2.8% m-o-m) in the same month. Meanwhile, deposits rose 8.9% y-o-y (-0.4% m-o-m) in August 2021 (Figure 5, 6, 7 & 8).

Banking sector net profit before Zakat and tax advanced 27.2% y-o-y to SR5.41 billion in August 2021. Further, on a monthly basis, the banking sector profits increased by 43.8% m-o-m in August 2021 (Figure 11 & 12).

Mortgage increased 31.7% y-o-y (+54.7% m-o-m) to SR12.9 billion in August 2021. Mortgage growth assisted overall loan growth of +1% m-o-m and +14% y-o-y. Mortgage run-rate for 2021 now stands at SR12.3 billion; 2020 Mortgage run rate was SR11.3 billion.

Saudi Central Bank’s foreign reserves, on an annual basis, rose 0.3% in August 2021 versus a decline of 1.4% y-o-y in July 2021. Further, the reserves increased 3.0% m-o-m in August 2021 (-1.0% m-o-m in July) (Figure 13 & 14). Meanwhile, as of August 2021, government reserves with Saudi Central Bank stood at SR426.948 billion (including government current account), a monthly decline of 3.1%.

Q2 2021 labour data: The unemployment rate of the total working age population (Saudis and non-Saudis 15 years and above) decreased to 6.6% in Q2 2021, compared to 9.0% in Q2 2020, according to estimates of the General Authority for Statistics. Moreover, the unemployment rate of total Saudis (males and females 15 years and above), decreased to 11.3% in Q2 22021, compared to 11.7% Q1 2021. Saudis’ total unemployment rate is 4.2 pp lower than in the same period of the previous year, below its pre-COVID level.

Point-of-sale (POS) transactions increased 31.5% y-o-y in August 2021 (+23.3% y-o-y in July 2021). However, the ATM cash withdrawals declined by 13.2% y-o-y in August 2021 as compared to the decline of 19.8% in July 2021. The increase in POS transactions was driven by rise in ‘Transportation’, ‘Restaurants & Hotels’, ‘Clothing and Footwear’ and ‘Food & Beverages’ segments increasing 38.5% y-o-y, 35.1% y-o-y, 27.5% y-o-y and 20.4% y-o-y, respectively.

Remittances (Personal Transfers) by Saudi nationals advanced 64.7% y-o-y in August 2021 (+8.1% y-o-y in July 2021). Further, growth in remittances by non-Saudi nationals increased 11.0% y-o-y in the same month (-17.7% y-o-y in July 2021).

Index of Industrial Production (IIP) increased 4.3% m-o-m  ( +5.9% y-o-y) in July 2021, mainly due to increase in mining and quarrying activity (+6.1% m-o-m) and electricity and gas sectors activity (+7.9% m-o-m). However, non-oil manufacturing activity saw m-o-m decline of 2.3%.

Cost of living index increased 0.3% y-o-y in August 2021 as compared to 0.4% y-o-y in July 2021. The increase in CPI is mainly originated from higher prices of ‘Transport’ (+6.5% y-o-y) and ‘Food and Beverages’ (+1.9% y-o-y). The increase in ‘Transport’ prices was mainly due to the increase in operating of personal transport equipment prices (+21.9%), which in turn was resulted by the rise in prices of fuels and lubricants (+44.3%). Further, the rise in ‘Food & Beverages’ was mainly due to the increase in food prices (+2.0%). On a monthly basis, the CPI rose 0.1% in August (+0.2% m-o-m in July).

Crude oil prices (Brent September futures contract) increased 11.4% MTD in September 2021, as supply remains tight. Meanwhile, the Saudi Arabian crude oil production increased 8.0% y-o-y (+2.1% m-o-m), to 9.630mbpd in August 2021, as compared to the increase of 11.6% y-o-y in July.

Crude price outlook: The US Energy Information Administration (EIA) in its September 2021 report showed, Brent crude oil spot prices averaged $71/barrel in August, down $4/barrel from July. Brent prices will remain near current levels for the remainder of 2021, averaging $71/barrel during the fourth quarter of 2021. – TradeArabia News Service