country analysis quarterly monitor gcc saudi arabia q3 2013
TRANSCRIPT
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7/29/2019 Country Analysis Quarterly Monitor Gcc Saudi Arabia q3 2013
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Q32013
QuarterlyOutlook
KSA
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7/29/2019 Country Analysis Quarterly Monitor Gcc Saudi Arabia q3 2013
2/19
FranciscoQuintanaSeniorEconomist
CamilleAccadResearchAnalyst
DanaAlFakirResearchAnalyst
KarmenMenesesAdministrativeAssistant
IMPORTANT DISCLAIMER: The information contained in this report is prepared by the Research Department of Asiya Investments and is believed to be reliable, but its accuracy and completeness
are not warranted. Opinions, estimates, and investment strategies and views expressed herein are: 1) based on current market prices, data, and conditions; 2) subject to change without notice;
and 3) may differ from the opinions expressed for other purposes or in other contexts by other areas of Asiya. Asiya does and seeks to do business in countries covered in its research reports;
hence, investors should be aware of potential conflicts of interests that could affect the reports objectivity. Research recommendations do not constitute financial advice nor extend offers to
participate in any specific investment on any particular terms. Investors should consider this material as only a single factor in making their decisions.
Everymonth,weprovide:
1) Macroeconomicoutlook.
2) Analysisof
all
countries
in
Asia
and
GCC,
andsomekeyindustrializedeconomies.
3) Tradingdevelopmentsonallmajor
commodities.
www.asiyainvestments.com
2
AsiyaResearchataglance
KSAQuarterlyOutlook Q32013
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SaudiArabia:GDPpoisedtocontinuetoeasethisyear
1. Economy: in early contraction.
Growth: witnessed its slowest expansion since Q1 2011, in Q1 2013, comingin at a mere 2.1% yearonyear on lower oil output. Growth is expected tobe lackluster until years end on waning oil demand. But a mild pick up isforecasted for next year.
Consumption: consumer credit loans slipped slightly recently, butshould pick up on higher loan growth in the real estate sector due torising rents.
Government: spending will continue to rise as the government strivesto boost publicsector employment, capital spending on hospitals,school, transport infrastructure and 500,000 new affordable housingunits.
Inflation: picked up slightly in July, due to a spike in food prices during theHoly month of Ramadan. However it should steady due to the subsidies on arange of basic goods and as commodity prices remain subdued. Higher
inflationary pressures may arise if the pace of construction of affordablehousing does not increase.
Labor market: as the unemployment rate remains high among youngSaudis, the government continues to push for a higher quota of Saudiemployees in the private sector. But due to a backlash from the privatesector, the government appears to be easing its Saudization measuresslightly.
2. Risks: slowing global economy, social unrest, and falling oil prices.
Lower oil output due to sluggish global demand amid a fragile globalrecovery.
Political instability due to youth unemployment. Sectarian unrest. Spillovereffects from conflicts in Egypt and Syria.
Saudization of the labour force is gradually increasing the cost of firms,although the impact has not been large yet.
Inflation could jump on rising demand and salaries (however the externalfactors and subsidies should help keep a cap on prices).
.Source: IMF,ConsensusForecastsandAsiyaforecasts.
KSAQuarterlyOutlook Q32013
Indicator 2011 2012e 2013f 2014f
GDP(NominalSAR,mn) 2,511 2,697 2,793 2,885
GDP(YoY) 8.5 6.2 3.2 4.4
Oil GDP(YoY) 10.4 5.5 2.8 3.4
NonoilGDP(YoY) 8.1 5.0 4.2 5.1
Exports(YoY) 8.7 5.0 0.2 3.5
Imports(YoY) 9.6 4.2 4.0 6.6
Inflation 5.0 3.4 4.0 4.1
M2(YoY) 15.4 13.6 6.5 7.2
BudgetBalance(%GDP) 12.0 14.6 9.0 6.0
CurrentAccount(%GDP) 12.7 15.9 11.5 10.1
UnemploymentRate 5.8 5.5 5.3 5.3
ExternalDebt(%GDP) 13.0 11.7 11.2 10.6
ExchangeRate(SAR:USD) 3.8 3.8 3.8 3.8
FinancialSector(creditgrowth) 10.7 10.0 8.0 7.0
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Growthslips
SaudiArabia:oilrevenuesfallamidslowingglobaldemand
KSAQuarterlyOutlook Q32013
20
10
0
10
20
30
40
2005
2006
2007
2008
2009
2010
2011
2012
SA:GDPGrowth
GDPgrowth
%chg, YoY
Since2001
10
5
0
5
10
15
20
2005
2006
2007
2008
2009
2010
2011
2012
SA:ContributiontoGrowth
OilSector
NonoilSector
%pt,YoY
Since 2001
onweakeroildemand.
Source:AsiyaResearchonDataStream,2013 Source:AsiyaResearchonDataStream,2013
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Growthdrivenbynetexports.
SaudiArabia:exportsdriveGDPgrowth
KSAQuarterlyOutlook Q32013
2
0
2
4
6
8
10
2006
2007
2008
2009
2010
2011
2012
SA:ContributiontorealGDP
Agriculture Industry
Services RealGDPGrowth(rhs)
%pt %chg,YoYSince2006
Industry takesahit.
Source:AsiyaResearchonDataStream,2013 Source:AsiyaResearchonDataStream,2013
30
20
10
0
10
20
30
40
2005
2006
2007
2008
2009
2010
2011
2012
SA:ContributiontoNominalGDP
Government Consumption
Exports Imports
Investments GDPGrowth(rhs)
%ppt %chg,YoYSince2005
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Dieselproductionincreased,butfueloileased.
SaudiArabia:oilproductiongrowthstillcontracting
KSAQuarterlyOutlook Q32013
0
50,000
100,000
150,000
200,000
250,000
300,000
350,000
400,000
450,000
500,000
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
SA:Production
Asphalt CrudeOil Diesel FuelOil
barrels Since2002
15
10
5
0
5
10
15
20
0
2,000
4,000
6,000
8,000
10,000
12,000
Apr
11
Jun
11
Aug
11
Oct
11
Dec
11
Fe
b
12
Apr
12
Jun
12
Aug
12
Oct
12
Dec
12
Fe
b
13
Apr
13
SA:CrudeOilProduction
PerDay YoYGrowth(rhs)
barrels %chg,YoYSince2010
Oilproductiongrowth sawaslightuptickinQ2.
Source:AsiyaResearchonDataStream,2013 Source:AsiyaResearchonDataStream,2013
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Exportscontractedamidpoorglobaldemand.
SaudiArabia:exportgrowthdeclines,mayriseonhigheroilprices
KSAQuarterlyOutlook Q32013
5,000
0
5,000
10,000
15,000
20,000
25,000
20
0
20
40
60
80
100
Mar
11
May
11
Jul11
Sep
11
Nov
11
Jan
12
Mar
12
May
12
Jul12
Sep
12
Nov
12
Jan
13
Mar
13
SA:ForeignTradeTrade
Balance
(rhs)
Exports
Imports
%chg,YoYUSDmn
Since2011
30
40
50
60
70
80
90
100
110
120
0
50
100
150
200
250
May
11
Jul11
Sep
11
Nov
11
Jan
12
Mar
12
May
12
Jul12
Sep
12
Nov
12
Jan
13
Mar
13
May
13
SA:Exportsvs CrudeOilPrices
ExportUnit
Value
WTICrude
Oil
Prices(rhs)
1973=100
Since2011 USD/barrel
Exportvalues&oilpricessteadiedinQ2.
Source:AsiyaResearchonDataStream,2013 Source:AsiyaResearchonDataStream,2013
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Demanddisappointsacrosstheboard.
SaudiArabia:exportslacklusteracrosstheboard
KSAQuarterlyOutlook Q32013
6 4 2 0 2 4 6
US
NIE
Japan
EU
Other
ASEAN
MiddleEast
China
India
SA:ContributiontoExports
Apr13
Mar13
5yrsaverage
AsofApril,2013
2.00 0.00 2.00 4.00 6.00 8.00 10.00
Japan
ASEAN
MiddleEast
US
NIE
China
India
EU
SA:ContributiontoImports
Apr13
Mar13
5yraverage
%pt,YoY
AsofApril,2013
EUleadingcontributortoimports.
Source:Asiya
Research
on
DataStream,
2013 Source:
Asiya
Research
on
DataStream,
2013
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9
Saudiunemploymentremainshigh,prompting
theimplementationofstringentSaudization
measures.
KSA:unemploymentstillanissue,yetSaudihasbeguntakingastepback
from
its
bold
Saudization
measures
QuarterlyEconomicOutlook Q22013
Source:AsiyaResearchonDataStream,2013.
0
2
4
6
8
10
12
14
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
SA:Unemploymentbynationality
Total Saudis NonSaudis
% Since2002
Atthe
beginning
of
July,
the
government
announced
thatcontractingcompaniescanincludethecostofthe
recentlyimposedexpatriatelevyintotheirbidsfor
futurepublicsectorprojects.Thiscomesafterthe
companiesvoicedtheirconcernsovertheimpactthe
levyishavingontheirprofitmargins.
Theannouncementcomessoonafterthegovernment
extendedtheamnestyonincorrectvisasuntilearly
Novemberthisyear.
10
5
0
5
10
15
2004
2005
2006
2007
2008
2009
2010
2011
SA:Laborforce
LaborForcegrowth
Populationgrowth
%chg,YoY Since 2004
Signs of a pull back on the Saudization front:
Laborforcegrowthshootsuppast10%in2011.
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InflationpickedupslightlyinJulyduetoriseinfood
pricesasaresultofHolymonthofRamadan.
SaudiArabia:inflationexpectedtosteady
QuarterlyEconomicOutlook Q22013
0 0.5 1 1.5 2 2.5
Education
Furnishing
Transport
Clothing
Other
Housing
Food
SA:Contributiontoinflation
Q32012
Q22012
5yearAverage
% pt
Asof Q312
Food&housingstableandbelowtrend.
Source:Asiya
Research
on
DataStream
&
SAMA,
2013. Source:
Asiya
Research
on
DataStream,
2013.
Education
5%
Clothing
15%
Food
35%Furnishing
7%
Other
8%
Housing
15%
Transport
15%
SA:CPIbasket
0
2
4
6
8
Jun1
1
Sep1
1
Dec1
1
Mar1
2
Jun1
2
Sep1
2
Dec1
2
Mar1
3
Jun1
3
Sep1
3
Dec1
3
Mar1
4
SA:InflationAnnual
Inflation
%chg,YoYSince 2011
Further notes on inflation
Thereis
apotential
risk
of
inflation
witnessing
an
uptick
next
year,
iftheaffordablehousingprojectdoesnotpickupinpace.
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SaudiArabia:creditgrowthslipsslightly,butinvestorconfidencerecovers
QuarterlyEconomicOutlook Q22013
Source:Asiya
Research
IFO
World
Economic
Survey,
2013.
Source:AsiyaResearchonSAMA,2013.
Creditgrowthwitnessesmarginalease.Investorconfidencesettomakeacomebackonthe
backofsomeeconomicsignsofrecoveryintheUS.
0
1
2
3
4
5
6
7
8
9
May
06
Nov
06
May
07
Nov
07
May
08
Nov
08
May
09
Nov
09
May
10
Nov
10
May
11
Nov
11
May
12
Nov
12
May
13
SA:InvestorconfidenceInvestor
Confidence
(Next
6Months)
InvestorConfidence(current)
Since2006
0
2
4
6
8
10
12
Sep
10
Nov
10
Jan
11
Mar
11
May
11
Jul11
Sep
11
Nov
11
Jan
12
Mar
12
May
12
Jul12
Sep
12
Nov
12
Jan
13
Mar
13
May
13
SA:Consumercreditgrowth
YoYGrowth 5yearaverage
%chg,YoY
Since2010
Further notes on consumer credit
Consumerlending,
with
the
exception
of
credit
cards,
grew
by
astaggering
23%
yearonyearin1H2013.
Household goods outlook
In April this year, the King voiced frustrations over the slow progression of the
500,000 unit housing development. To hasten it, he has ordered that the
Ministry of Municipal and Rural Affairs hand over the municipal lands to the
Ministry of Housing. However, projects rate of progression remains weak.
As a result, demand for household goods (home appliances, consumer
electronics, furniture, etc.) is expected to increase at least by next year.
Home furniture grew by 0.8% monthonmonth in July and by 5.5% yearon
year, higher than the 2.8% in the previous month.
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Realestateisstillasmallchunkoftotalcredit
KSA:risingrentspropupcreditgrowthinrealestate
KSAQuarterlyOutlook Q32013
butisthefastestgrowing.
Source:Asiya
Research
on
DataStream,
2013. Source:
Asiya
Research
on
DataStream,
2013.
0
500
1,000
1,500
2,000
2,500
Dec
10
Mar
11
Jun
11
Sep
11
Dec
11
Mar
12
Jun
12
Sep
12
Dec
12
Mar
13
Jun
13
SA:Consumer&CreditCardLoans
RealEstateFinance Cars&Equipment
Others
Riyals,billionSince2010
0
5
10
15
20
25
30
35
Dec
11
Fe
b
12
Apr
12
Jun
12
Aug
12
Oct
12
Dec
12
Fe
b
13
Apr
13
Jun
13
SA:Consumer&creditcardloansgrowth
RealEstateFinance Cars&Equipment
Others
%chg,YoY Since2011
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Broadmoneysupplytrekkingupwards.
SaudiArabia:broadmoneygrowthedgesup
KSAQuarterlyOutlook Q32013
0
5
10
15
20
25
30
Jul11
Sep
11
Nov
11
Jan
12
Mar
12
May
12
Jul12
Sep
12
Nov
12
Jan
13
Mar
13
May
13
Jul13
SA:MoneySupplyGrowth
M1 M2
%chg,YoYSince2011
0.0
0.2
0.4
0.6
0.8
1.0
1.2
Jun
11
Aug
11
Oct
11
Dec
11
Fe
b
12
Apr
12
Jun
12
Aug
12
Oct
12
Dec
12
Fe
b
13
Apr
13
Jun
13
SA:InterestRate
3MoAvgInterbankRate 3yearAverage
%Since2011
InterbankratesteadiesaboveLTaverage.
Source:Asiya
Research
on
DataStream,
2013 Source:
Asiya
Research
on
DataStream,
2013
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Tradedepositsrecovers.
KSA:investmentsfromoilproceedsindecline
KSAQuarterlyOutlook Q32013
80
60
40
20
0
20
40
Jul11
Sep
11
Nov
11
Jan
12
Mar
12
May
12
Jul12
Sep
12
Nov
12
Jan
13
Mar
13
May
13
Jul13
SA:TradeDeposits
Depositsfor
Letter
of
Credit
YoYGrowth
SARbn,%
Since2011
24
12
0
12
24
36
48
60
10
5
0
5
10
15
20
25
Jul11
Sep
11
Nov
11
Jan
12
Mar
12
May
12
Jul12
Sep
12
Nov
12
Jan
13
Mar
13
May
13
Jul13
SA:InvestmentAbroad
Inv.inForeignSecurities
Depositsw
banks
abroad
(rhs)
%chg,YoY
Since2011
%chg,YoY
Depositsabroadremainincontraction.
Source:Asiya
Research
on
DataStream,
2013 Source:
Asiya
Research
on
DataStream,
2013
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Investmentinforeignsecuritiesrises
SaudiArabia:reservesgrowthontherise
KSAQuarterlyOutlook Q32013
0
500,000
1,000,000
1,500,000
2,000,000
2,500,000
3,000,000
Jul11
Sep
11
Nov
11
Jan
12
Mar
12
May
12
Jul12
Sep
12
Nov
12
Jan
13
Mar
13
May
13
Jul13
SA:CentralBankBalanceSheet
Depositswbanksabroad Gold
Inv.inForeignSecurities Cash
Other
SAR
Since2011
2,100,000
2,150,000
2,200,000
2,250,000
2,300,000
2,350,000
2,400,000
2,450,000
2,500,000
2,550,000
2,600,000
2,650,000
Jul12
Aug
12
Sep
12
Oct
12
Nov
12
Dec
12
Jan
13
Fe
b
13
Mar
13
Apr
13
May
13
Jun
13
Jul13
SA:InternationalReservesUSDmnSince2012
andsodoesinternationalreserves.
Source:Asiya
Research
on
DataStream,
2013 Source:
Asiya
Research
on
DataStream,
2013
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16
Timedepositsrecoverslightly.
SaudiArabia:savingsgrowthontherise
KSAQuarterlyOutlook Q32013
25
20
15
10
5
0
5
10
15
270,000
280,000
290,000
300,000
310,000
320,000
330,000
340,000
350,000
Jul11
Sep
11
Nov
11
Jan
12
Mar
12
May
12
Jul12
Sep
12
Nov
12
Jan
13
Mar
13
May
13
Jul13
SA:TimeDeposits
TimeDeposits
YoYGrowth(rhs)
SAR %chg,YoYSince2011
0
5
10
15
20
25
300,000
400,000
500,000
600,000
700,000
800,000
900,000
Jul11
Sep
11
Nov
11
Jan
12
Mar
12
May
12
Jul12
Sep
12
Nov
12
Jan
13
Mar
13
May
13
Jul13
SA:DemandDeposits
DemandDeposits
YoYGrowth(rhs)
SAR %chg,YoYSince2011
Growthindemanddepositscontinuestoascend.
Source:Asiya
Research
on
DataStream,
2013 Source:
Asiya
Research
on
DataStream,
2013
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SARpeggedtoUSD
KSA:appreciationintradeweightedterms
KSAQuarterlyOutlook Q32013
3.740
3.745
3.750
3.755
3.760
Jul11
Sep
11
Nov
11
Jan
12
Mar
12
May
12
Jul12
Sep
12
Nov
12
Jan
13
Mar
13
May
13
Jul13
SA:ForeignExchange
USD:SAD
perUSDSince2o11
80
85
90
95
100
105
110
Jul11
Sep
11
Nov
11
Jan
12
Mar
12
May
12
Jul12
Sep
12
Nov
12
Jan
13
Mar
13
May
13
Jul13
SA:ForeignExchange
REER
1970=50 Since2011
appreciationagainstothercurrencies.
Source:AsiyaResearchonDataStream,2013
Note:TheREERisderivedfromtheTradeWeightedUSDIndex,and
calculatedas
aweighted
average
of
the
price
of
various
currencies
relativetotheUSD.
Source:AsiyaResearchonDataStream,2013
Appreciation Appreciation
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Marketperformance backonupwardtrend.
KSA:marketperformanceontherise
KSAQuarterlyOutlook Q32013
10
0
10
20
30
40
50
60
5,600
6,100
6,600
7,100
7,600
Aug
11
Oct
11
Dec
11
Fe
b
12
Apr
12
Jun
12
Aug
12
Oct
12
Dec
12
Fe
b
13
Apr
13
Jun
13
Aug
13
SA:FinancialMarkets
Index YoYChange(rhs)
1998=1000 %chg,YoY
Since2011
20 0
20
40
60
80
100
120
Media
Insurance
Energy
Petrochem
Industrials
Financials
MultiInv.
Construction
Transport
Telecom
Cement
Food
RealEstate
Retail
Tourism
SA:MarketReturnbySector
%YoY
AsofAugust2013
Tourismandretailleadingsectors.
Source:Asiya
Research
on
DataStream,
2013 Source:
Asiya
Research
on
DataStream,
2013
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AsiyaResearch AsiyaInvestments
KIPCOTower,floor31
KhalidBinAlWaleedStreet,Sharq
Kuwait
Tel:+965
2297
1300
Fax:+96522971310
@AsiyaInvest
www.asiyainvestments.com
AsiyaResearch ContactInformation
IMPORTANT DISCLAIMER: The information contained in this report is prepared by the Research Department of Asiya Investments and is believed to be reliable, but its accuracy and completeness
are not warranted. Opinions, estimates, and investment strategies and views expressed herein are: 1) based on current market prices, data, and conditions; 2) subject to change without notice;
and 3) may differ from the opinions expressed for other purposes or in other contexts by other areas of Asiya. Asiya does and seeks to do business in countries covered in its research reports;
hence, investors should be aware of potential conflicts of interests that could affect the reports objectivity. Research recommendations do not constitute financial advice nor extend offers to
participate in any specific investment on any particular terms. Investors should consider this material as only a single factor in making their decisions.
KSAQuarterlyOutlook Q32013