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28 March 2024

Saudi business volume surges

Published
By Staff

The value of settled letters of credit (LCs) in Saudi Arabia swelled by more than14 per cent in June to indicate resurging business in the largest Arab economy similar to the volume reached in the peak 2008 period, the Gulf Kingdom’s largest bank said on Tuesday.

An increase in the imports of goods in the world’s oil superpower reflects rebounding consumer spending in Saudi Arabia given its heavy dependence on crude exports, National Commercial Bank (NCB) said in a study.

Citing data by the Saudi Arabian Monetary Agency, the report showed that settled LCs reached almost SR19.1 billion ($5.1 billion) in June, an impressive 14.7 per cent over the same month last year.

“As Saudi proved resilient to external shocks, increasing confidence on the domestic and international front enhanced corporate activity in the strong economy,” said the study, sent to Emirates 24/7.

According to the “Ease of Doing Business” ranking, Saudi Arabia climbed by one rank to 11th place this year, the study noted.

“As such business pursued LCs to import additional materials and goods to accommodate growing demand. Settled LCs for building materials have gained 15.8 per cent Y/Y for the first half of 2010 while machinery increased by 16.6 per cent over the same period.”

NCB said the rise was in line with plans to provide 500,000 residential units for Saudi citizens which are set to serve the growing local demand for real estate. Furthermore, over the first six months of 2011, motor vehicles grew 12.7 per cent on an annual basis, it said, adding that newly opened LCs have also gained by 10.1 per cent in the first half, indicating future market needs are also on the rise.

“Similarly, newly opened LCs for building materials and machinery climbed by 6.9 per cent and 38.9 per cent, respectively. We also expect the total amount of settled LCs for 2011 to exceed SR200 billion and come close to 2008’s record high of SR212.4 billion if not higher.”