Riyadh -  Saudi Arabia recorded a strong economic growth during the second quarter (Q2) of 2022 amid a surge in energy prices, marking the fastest pace in more than 10 years, according to a recent report by Al Rajhi Capital.

The research entity noted that the International Monetary Fund (IMF) earlier projected that the Kingdom will be one of the world's fastest-growing economies with a growth rate of 7.6% in 2022.

Moreover, S&P Global Ratings affirmed Saudi Arabia’s rating at ’A-/A-2’ with a positive outlook, citing higher oil revenues and production, as well as the government’s effective reform programme.

Gross Domestic Product (GDP)

The Kingdom’s gross domestic product (GDP) rose by 12.2% year-on-year (YoY) in Q2-22, supported by a 22.9% surge in the oil sector and an 8.2% increase in the non-oil sector.

In addition, the Q2-22 GDP growth rate was higher than the 9.9% YoY rate which was registered in Q1-22.

Money Supply

The Saudi broader money supply (M3) went up by 9% YoY in August 2022 to SAR 2.44 trillion, compared to an 8.10% growth in July this year. The Saudi Central Bank (SAMA) expected that the September M3 might be higher than its rate in August 2022.

Additionally, M1 increased by 5.10% YoY in August 2022, while M2 rose by 7.10%.

Banking Sector

Banks operating in the Kingdom witnessed a 21.80% YoY hike in net profit before Zakat and tax to SAR 6.60 billion in August 2022, versus a 54.30% YoY leap last July.

Month-on-month (MoM), the net profits climbed by 13.50% in August 2022.

Furthermore, Saudi Arabia posted a 15.80% YoY hike in banking credit during August 2022, higher than a 14.90% rise a month earlier.

The public sector's claims increased by 9.60% YoY in August, versus an 11.30% surge in July 2022.

Meanwhile, the Saudi lenders' deposits grew by 10.30% YoY in August 2022, compared to a 9.30% increase last July. Deposits from businesses and individuals, which account for around 65% of the total deposit base, grew by 5.10% YoY, while the government entities’ deposits soared by 20.10%.

Similarly, the foreign exchange reserves of SAMA edged up by 0.60% YoY to SAR 1.71 trillion ($457.40 billion) in August 2022. On a monthly basis, the reserves declined by 1.40% in August when compared to the value that was registered in July.

Remittances

Remittances from Saudi citizens enlarged by 10.20% YoY to nearly SAR 6.33 billion in August 2022, while the remittances from non-Saudi nationals plunged by 13.20% YoY to about SAR 11.90 billion.

Industrial Production Index

Saudi Arabia’s Industrial Production Index grew by 1.6% MoM in July 2022, mainly backed by a 14.6% increase in the electricity and gas sectors as well as a 1.6% rise in mining and quarrying activity. Meanwhile, the manufacturing activity inched up by 0.3% MoM in July 2022.

Inflation Dynamics

The Kingdom’s Consumer Price Index (CPI) rose by 3% in August 2022 after it recorded a 2.7% YoY increase last July. The higher inflation rate was mainly attributed to a 4% annual growth in each of the prices of food and beverages as well as the transport sectors.

Crude Oil Dynamics

Brent crude oil prices retreated by 6.40% month-to-date (MTD) in September 2022. Meanwhile, the crude oil production in Saudi Arabia increased by 13.80% YoY to 10.96 million barrels per day (mbpd) in August 2022, versus a 14.30% YoY hike a month earlier.

On a monthly basis, the Kingdom’s crude oil output went up by 1.70% in August 2022.

Non-oil Foreign Trade

The Kingdom’s non-oil exports widened by 26.40% YoY to SAR 26.70 billion in July 2022, compared to a 29.50% leap in June 2022. The chemical products, which represent about 36% of the total merchandise non-oil exports, increased by 46.90% YoY.

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