Riyadh – Mubasher: International Monetary Fund maintained its expectation for the Saudi economy at 1.2% for 2016, while raising it to 2% up from 1.9% for 2017.
“The fiscal deficit in 2016, based on the current policies, is expected to be reduced to 13% of GDP, as compared to 15.9% in 2015, while the current account deficit is expected to be decreased to 6.4% of GDP in 2016, versus 8.3% in 2015,” Al Rajhi Capital reported.
Foreign reserve assets fell 1.9% in June, after a marginal increase of 0.1%in May, “as the government tapped its foreign reserves to finance the budget deficit,” the report said.
Crude oil prices, Brent September futures contract, declined 14.6%, on a monthly basis in July, compared to 1.2% in June.
U.S. West Texas Intermediate (WTI) and Arablight crude futures retreated 15.1% and 14.1% month-on-month in July, respectively.
The decline in July’s crude oil prices was attributed to the oversupply in the market as OPEC countries raised the production, adding to the addition of the U.S. to 44 oil rigs, the report stated.
The Kingdom’s crude oil production went down 1.3% year-on-year in July 2016, compared to a yearly rise of 0.2% in June 2016.
“World Bank has raised its crude oil price forecast to $43 per barrel (pb)for 2016, compared to $41 per barrel predicted in April, owing to supply disruptions and strong demand in the second quarter,” Al Rajhi Capital said.
Saudi Purchasing Managers' Index (PMI) rose to 56 points in July from 54.4 points in June.
Point of sale transactions (POS) gained 2.7% year-on-year, while ATM cash withdrawals grew 10.7% year-on-year in June.
Bank credit to the private sector slowed down 8.1% year-on-year in June, while credit allocated to the private sector grew by 0.4% month-on-month in June.
Deposits went down 3.3%in the same month, registering a steady decline compared to the previous month, but advanced 0.1% month-on-month, backed by higher deposits from the private sector.
“On the equity front, TASI declined 3.0% m-o-m in July 2016, as falling oil prices dragged the index lower,”
