Saudi imports set to surge in 2010

Saudi Arabia’s imports by the private sector swelled by more than 17 per cent in the first eight months of 2010 and total imports of goods by the Gulf Kingdom could reach SR395 billion, its largest bank said on Tuesday.

National Commercial Bank (NCB) gave no comparison for 2009 but figures by the Riyadh-based Jadwa Investment, citing government data, showed Saudi Arabia’s total imports stood at around 320 billion in 2009. They were far lower than the 2008 imports of around SR370 billion and the decline was mainly a result of a slowdown in economic activity due to the global fiscal crisis.

NCB’s figures showed letters of credit (LC) issued by banks to the private sector surged by around 17.1 per cent to nearly SR125.5 billion in the first eight months of 2010 from about SR107.2 billion in the first eight months of 2009.

“LC issuance is a basic indication of international trade activity and sentiment in a country, and Saudi’s twelve banks have experienced a major increase in the issuance of LCs this year,” NCB said in a study sent to Emirates 24/7.

“Private sector import financing (settled LCs) by these banks has risen by around 17.1 per cent in the first eight months of this year…we expect that the value of imports will reach an estimated total for this year of nearly SR 395 billion.”

According to the study, economic activities in the private sector have continued their upswing through the year as demand persists.

It showed investor demand for building materials and machinery, valued altogether at SR 24.3 billion, has risen by 29 per cent and accounts for nearly 24 per cent of total import financing at the end of August.
Consumer demand for textiles and clothing, motor vehicles, and appliances has driven the issuance of new LCs up by nearly 44 per cent and accounts for 24 per cent of the total commercial bank import financing, it said.

An increase of around 19 per cent in foodstuff, on the other hand, is mainly attributable to the surge in agricultural prices globally, as reflected by the Goldman Sachs Agriculture Index rise of 30 per cent year to date, it added.

“This continued acceleration of domestic economic activity is an indication of increasing confidence in the private sector and the rise of consumer confidence.”

Saudi Arabia, the world’s oil superpower, is the largest Arab economy, with its gross domestic product standing at around SR1,409 billion in 2009. Jadwa expects it to surge to SR1,601 billion this year and SR1,731 billion in 2011.

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