| STEADY AND STRONG GDP GROWTH FOR SAUDI |
The fourth quarter of 2018 had been a period of strong economic growth for Saudi Arabia, as crude oil prices surged and non-oil activity picked up.
GDP growth in the last three months of 2018 rose 3.59% compared to a 1.31% contraction in the same period in 2017, becoming the fastest quarterly growth in three years. The non-oil sector notched up 2% GDP growth during the period, compared to a marginally better 2.1% in the previous year, according to latest data available from the General Authority for Statistics.
Crude petroleum and natural gas led the gains, rising 6.45% during the quarter, followed by brisk gains in mining and quarrying (up 6.41%), manufacturing (3.52%), finance, insurance, real estate and business services (3.51%), electricity, gas and water (2.36%), and a more modest gain of 0.84% in wholesale and retail trade.
Among major GDP economic activity, only the construction sector saw a 3.35% decline.
Saudi Arabian Monetary Authority data also shows a strong pickup in credit to the private sector in February, growing to just over 3% year on year and around 1% month on month.
Most sectors saw a jump in credit activity, including manufacturing and processing (7.88%), and electricity (2.21%). Construction, a closely watched sector, also witnessed a 2.21% jump. Commerce, the biggest segment, saw a 10.8% decline in February.
Real estate loans in the fourth quarter of 2018 jumped 9.56%, compared to the same period the previous year. Consumer loans during the period also expanded 2.21%.
MARKET SENTIMENT IMPROVES
The government’s efforts to stimulate the economy is trickling down into the system with improved indicators.
SAMA data shows the cost of living index contracted 2.2% in February year on year and 0.2% compared to January.
The latest Saudi purchasing managers index, also points to higher activity. Markit's Saudi PMI index, a composite gauge designed to give a single-figure snapshot of operating conditions in the non-oil private sector economy, climbed to 56.8 in March, from February’s 56.6. The latest reading was the highest since December 2017 and indicated one of the strongest growth performances over the past 3.5 years.
“March saw the rate of new business growth accelerate for the fifth time in the past six months to the highest since April 2015,” Markit said in its latest report. “Surveyed firms reported that the upturn largely reflected stronger market conditions, with greater sales efforts, improving product offerings and competitive pricing also helping to attract customers. New export orders rose for the first time in three months but only marginally, indicating that the main impetus continued to come from domestic sources.”
ARAMCO BOND
Fresh from its 70% stake in Saudi Basic Industries Corp. (SABIC), Saudi Aramco priced a debt offering of USD 12 billion for its inaugural international bonds.
The issuance consists of five tranches of senior unsecured notes under Saudi Aramco’s Global Medium Term Note Programme. These include:
- USD 1 billion at 2.750% senior notes due in 2022;
- USD 2 billion at 2.875% senior notes due in 2024;
- USD 3 billion at 3.500% senior notes due in 2029;
- USD 3 billion at 4.250% senior notes due in 2039; and
- USD 3 billion at 4.375% senior notes due in 2049
The offering is expected to close in April, trade on the London Stock Exchange and be admitted to the official list of the United Kingdom Listing Authority.
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