Improved Economic Outlook in Saudi Arabia

The data showed that credit to the private sector climbed for the fourth consecutive month in July while consumers also spent more, with point of sale transactions up by about a quarter on a year earlier.

Cash withdrawls from ATM machines also rose more than 12 percent on a year earlier.

“We continue to believe that steady oil prices and higher oil output coupled with better non-oil growth will aid the Kingdom’s economic recovery this year,” Al-Rajhi said in a note to clients.

The rebounding oil price has improved economic sentiment in the Kingdom and boosted expectations for economic growth.

“In addition, the Public Investment Fund’s first commercial loan worth $11 billion is likely to provide a boost to government spending, thereby helping the Kingdom to transform the economy in future,” Al-Rajhi said.

Last month the IMF said it expected real GDP growth to increase to 1.9 percent in 2018 with non-oil growth strengthening to 2.3 percent.

The IMF was broadly upbeat on the Saudi banking sector with credit and deposit growth although weak, expected to strengthen due to higher spending and non-oil growth.

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Bank profitability was also expected to increase as interest margins widen and banks remain well capitalized, the lender said.