Analysis | Saudi Economy – Jadwa Chartbook – January 2016

Published: January 6, 2016

Editor’s Note:

The Jadwa Investment firm in Riyadh introduced the “Saudi Chartbook” to provide a quick, chart-based briefing on the key developments and trends in the Saudi economy and stock market. SUSRIS is pleased to provide the summary and key data from the January 2016 Saudi Chartbook and a link to the complete report rich with illuminating charts and graphs. SUSRIS thanks Jadwa Investment for providing this insightful report for your consideration. For detailed commentary and statistical analysis, please refer to the Jadwa January Report below and at the link.

[Complete report with key charts at this link (English and Arabic)]

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January 2016 Saudi Chartbook

Summary

Real GDP: Data recently released by CDSI showed that real GDP growth has decelerated slightly in 2015.

Real Economy: Economic data for November showed a mixed picture. Data on consumer spending showed a moderation. The non- oil PMI rose from its lowest point on record in October.

Government Finance: The net monthly change in government accounts returned to negative territory n November, falling by $11.5 billion.

Foreign Reserves: SAMA FX reserves fell by $12 billion, month-on- month, to reach $632 billion in November.

Banking Indicators: Year-on-year growth in bank credit to the private sector rebounded in November, following a slowdown in October which was owed to a higher base last year. In December, SAMA raised the reverse repo rate for the first time since May 2008.

Inflation: In November, inflation reversed its accelerating trend during the previous two months to reach 2.3 percent. Looking ahead, we expect higher energy prices, as a result of the recent subsidy reform, to lead to an acceleration in inflation.

Energy Subsidies: The 2016 Saudi budget included price increases for domestic energy consumers.

Current account: In 2015, the Kingdom’s current account posted its first deficit since 1998 at –$43 billion (6.3 percent of GDP).

Oil – Global: Brent averaged $52 and WTI $49 per barrel in 2015. Rising regional geopolitical tensions pushed Brent up slightly in early January. We forecast 2016 average Brent prices at $ 47 per barrel.

Oil – Regional: Saudi crude production is expected to average 10.2 mbpd in 2015 and we expect it to remain unchanged in 2016.

Exchange Rates: The US Dollar/Riyal forward rate remained elevated partly due to geopolitical issues. We see no change in the peg due to the Kingdom’s strong economic fundamentals.

Stock Market: The TASI declined by 4.6 percent during December. Early January trading saw the TASI decline further due to regional geopolitical tension and a slump in Chinese stocks.

Volumes: Uncertainty over a number of events taking place during December meant monthly turnover was subdued.

Valuations: The weaker performance of the TASI in December saw price-to-earnings (PE) drop further below its two year average.

Sectoral Performance: Ten out fifteen sectors were down in the month of December.

Jan-chartbook

[Complete report with key charts at this link (English and Arabic)]

Source: Jadwa Investment

Fahad M. Alturki
Chief Economist and Head of Research
falturki@jadwa.com

Asad Khan
Senior Economist
rkhan@jadwa.com

Rakan Alsheikh
Research Analyst
ralsheikh@jadwa.com

Head office:
Phone +966 11 279-1111
Fax +966 11 279-1571
P.O. Box 60677, Riyadh 11555 Kingdom of Saudi Arabia

www.jadwa.com

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