JEDDAH — Saudi Arabia’s economy especially on the consumer spending front seems to be relatively stable amidst weak global data points. POS transactions continued its robust rise in July (+18.7% y-o-y; +9.8% m-o-m), driven by the ‘Restaurants and Hotels’, ‘Food & Beverages’ and ‘Clothing & Footwear’ segments; whereas ATM withdrawals recorded a drop (-0.4% y-o-y; +16.1% m-o-m) in July. Money supply increased by 4.7% y-o-y in July. Remittances from Saudi nationals rose for the fourth month in a row (+20.1% y-o-y) in July, whereas transfers from non-Saudi nationals declined (-5.9% y-o-y) in the same month. Meanwhile, the cost of living index continued to be in the deflation territory in July (-1.3% y-o-y; +0.1% m-o-m), owing to a decline in the ‘Housing, Water, Electricity, Gas’ sector which constitutes around a quarter of the index.

Saudi Arabian lending continued its upward journey in July helped by mortgage loan growth. Further, deposits also increased (+3.7% y-o-y; -0.7% m-o-m) in July. S

SAMA foreign reserves grew, although at a slower pace (+0.5% y-o-y; -1.8% m-o-m) in July; as recent debt issuances by the government has curbed its need to tap foreign reserves in order to plug the fiscal deficit. Moody’s believes that Saudi Arabia will drive global sukuk issuance in 2019.

With low debt to GDP ratio (~19% in 2018; Source: IMF), Saudi Arabia has enough buffer to raise additional debt to support its fiscal spending. Overall, we continue to believe that the Saudi Arabian economy will remain on the recovery path, amid higher oil revenues and the government’s commitment to support the non-oil sector. — SG