The pace of Saudi economy slowed down as a result of laggard corporate activity during the holiday period despite a boost in consumer spending, Riyadh-based Jadwa Investment said on Tuesday. It said July data revealed that the Kingdom's economic growth has been punctuated by the start of summer holiday season and the advent of Ramadan. Broad money supply (M3) growth fell to its lowest level in over a decade as low interest rates continued to encourage consumers to withdraw funds from savings accounts. Just under $15.5 billion has been wiped off the total value of savings accounts in the past year. Bank lending to the private sector rose by 0.6 percent - about average for the year to date - while inflation hit six percent in July, its highest level since March last year. Food prices and the rising cost of gold helped boost inflation, while this was offset by a slowing in rental inflation. Jadwa also revealed that there had been a one-off and unexplained monthly spike in the price of medical and transport and telecoms. Statistics showed that cement sales rose by their lowest annual growth rate for several years in July, although the finance firm said that the six percent rise pointed towards continued momentum in government infrastructure spending. The Saudi stock market succumbed to its traditional Ramadan slump and fell by 2.8 percent during August. Daily turnover fell $267 million (SR1 billion) and the daily volume of transactions fell below 50 million shares. All sectors declined in August as retail investors liquidated holdings in order to fund spending during Ramadan. Industrial investment and retail performed best, while building and construction and insurance came off worst. Meanwhile, Saudi Arabia's assets surged by around SR50 billion in the past seven months, SAMA said. From around SR1,570 billion at the end of 2009, SAMA's total assets soared to nearly SR1,620 billion at the end of July, according to SAMA's monthly bulletin released this week. Jadwa forecast that the surplus this year could be around SR67 billion on the grounds actual revenue could surge by nearly 32 percent to SR621 billion because of higher oil prices and production. It also expected spending to rise by around 2.5 percent to nearly SR554 billion. The surplus would account for around 4.2 percent of GDP this year against a deficit of SR45 billion or -3.2 percent of GDP in 2009,it said. NCB earlier forecast that the Kingdom will log a surplus of SR121 billion. “We are forecasting oil prices to average $75 in 2010. Prices have been trading within the $65-75 range, which is significantly higher than the $39 low back in February... this is largely due to optimism regarding the pace of global recovery and signs of demand rebounding in emerging markets,” NCB said.
