RIYADH: As the world economy goes through a turbulent time, the Saudi Central Bank, also known as SAMA, will continue to be vigilant to combat any potential risks, the bank said in its latest report.
In its Financial Stability Report 2023, SAMA Gov. Ayman Al-Sayari noted that financial stability risks have increased due to geopolitical tensions, stubbornly high inflationary pressures and monetary tightening.
But he stressed that Saudi Arabia will continue to grow in 2023, primarily driven by various initiatives associated with Vision 2030.
However, he added that the bank will continue to “monitor both global and domestic developments to maintain the stability and resilience of the financial system.”
Briefing about its tremendous growth in 2022, he said the Kingdom reported a real gross domestic product growth of 8.7 percent, as higher oil prices boosted public finances, leading to the budget surplus last year, the first in almost a decade.
Al-Sayari credited this to the Kingdom’s robust financial system, which “played a major role in supporting that economic performance.”
He added: “Operating under SAMA’s supervision, banks, insurers, finance companies and payment providers expanded financial services to all segments of the private sector and retail borrowers. Banks expanded their lending to meet the continued demand for mortgages.”
The SAMA report noted that the Kingdom’s economy is expected to grow at a slower rate of 3.1 percent in 2023, primarily due to lower oil-sector growth in line with the decision of the Organization of the Petroleum Exporting Countries and its allies, known as OPEC+, to cut oil output.
In October 2022, OPEC+ agreed to cut output by 2 million barrels per day, amounting to about 2 percent of the world’s demand.
Later in April 2023, Saudi Arabia and other OPEC+ members announced further oil output cuts of around 1.2 million bpd.
On a positive note, the report added that the non-oil GDP of the Kingdom would continue growing due to the revival of the tourism sector post-pandemic and the progress in the Vision 2030 initiatives such as privatization programs.
SAMA predicted Saudi Arabia’s inflation rate to slow in 2023, as commodity and food prices globally will stabilize, in addition to the rise in the US dollar that will likely curb upward pressure on imported goods in the Kingdom.
The central bank further projected that the asset growth of Saudi banks is expected to continue in 2023, driven by the expected demand for loans from the corporate segment.
