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29 March 2024

Economic upturn boosts Saudi consumer spending

Published
By Staff

A pick up in its economy boosted Saudi Arabia’s letters of credit (LCs) by more than 27% 

in the third quarter of 2011, indicating a surge in consumer spending, the Gulf Kingdom’s largest bank said on Tuesday.

National Commercial Bank (NCB) said imports of goods, reflected in opened LCs, are key indicator for consumer spending in Saudi Arabia, the largest Arab economy and the world’s dominant oil exporter.

It cited government data showing opened LCs reached nearly SR43.7 billion in the third quarter of 2011 an impressive 27.8% over the same quarter last year.

The increase was mainly attributed to “Appliances and Other Goods” category which gained by 58.7% and 55.1% on an annual basis.

Additionally, building materials and machinery have picked strongly by 43.4% and 37.2% over the same period last year.

Both sectors mark their eighth consecutive quarterly increase as the construction sector in the Kingdom booms, NCB said in its weekly bulletin.

The report showed that since the beginning of 2011, contract awards for the construction sector in Saudi Arabia have reached SR179.5 bn, a staggering 125% increase over the same period last year.

On the geographical front, the GCC region has been the favored region for purchases as settled LCs reached SR27.8 bn so far this year, representing 23.7% of total settled LCs.  Settled LCs for North America and Western Europe goods have increased by 36.8% and 0.8%, respectively.

Overcoming supply chain disruptions, Japan settled LCs grew by 29.6% Y/Y during the past quarter, according to NCB.

“The robust economy had demonstrated many opportunities for local and international investors and it will continue to do so with huge surpluses for 2011.”