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Home - June 2019

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ECONOMIC TRENDS

Diversifying its revenue streams has allowed the kingdom to attract more direct investments and counter the effects of worldwide uncertainties.


REAL ESTATE



Demand for loans for residential properties has been strong, indicating renewed confidence in the property market.


VISION 2030



Reforms that emphasise on opening the market up to foreign and private investors are expected to benefit the financial industry.


POWER

Cleaner and more sustainable sources are making their way into the kingdom’s power generation capacity.


SME

The new HRDF-backed platform has offered administrative and financing support to start-ups and SMEs, as well as enabled them to bid for projects.


CURRENCY



Concerns over the health of the global economy and the impact of a simmering trade spat have prompted major central banks to strike a dovish tone.


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 IN THIS EDITION

Saudi Arabian Monetary Agency’s (SAMA) latest Financial Stability Report has some promising analysis and data, indicating that the economy is back on track and set for further improvement over the next year.


A key indicator is SAMA’s own foreign reserves at the end of 2018, which rose for the first time since 2014 to reach almost SAR 1.9 trillion – sufficient for 40 months of imports.


SAMA data also shows government revenues have increased significantly in 2018 owing to both the oil and non-oil sectors. Total revenue reached SAR 895 billion in 2018, an uptick of almost 30% compared to the previous year, while non-oil revenue amounted to SAR 287 billion, of which tax revenue represented some SAR 166 billion, an increase of almost 90% on the previous year.


The fiscal strength and improvement in domestic fundamentals are important as most analysts believe the global economy is going to grow at a slower pace due to rising trade uncertainty, geopolitical headwinds and a slowdown in the Chinese and US economies.


“Overall, the Saudi economy remains quite resilient against contagion from growing uncertainty in the global economy,” SAMA said. “High levels of foreign reserves and a low level of public debt means that there is ample fiscal space to counter an economic downturn.”


Eng. Khalid Al-Falih, Saudi Arabia’s minister of energy, industry, and mineral resources, is also keeping a close eye on global developments that could have an impact on crude oil.


Increasing trade friction and potential barriers would certainly have a negative impact on the global economy and oil demand growth, the minister said at the OPEC-Non-OPEC Joint Ministerial Monitoring Committee in Jeddah on 3 June.


“But the direction of the negotiations (between US and China) is hard to predict. So, we intend to make our decisions based on thorough and holistic analyses,” the minister said. “This includes the impact of the trade conflict on oil demand, as well as a multitude of other factors.”


Barring external shocks, all indicators suggest the Saudi economy should gain momentum over the next 12 months.

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