Responding to the IMF prediction of a GDP contraction of 6.8$, the SAMA Governor, Ahmed Alkholifey, said he was not as pessimistic in an interview with Bloomberg. Despite a 1% contraction in the first quarter, he is confident in the Saudi economy’s resilience with continued fiscal and monetary support.
The recent sale data shows signs of recovery compared to the previous six months, a 50% increase in volume and 12% in value. However, Alkholifey said it is “still too early to say if it is a V-shaped recovery.” He said, “We see the light at the end of the tunnel, yet remain vigilant” – barring any downside risks from the second wave of the virus or changes to the global economy.
He further explained that the government had extended a program of support that has three elements. The first was targeted at the SME’s – the deferral payments and the funding for lending with a guarantee of 95% and the payment of the kafala program’s fees. The second element was injecting liquidity of 50bn SR into the economy directly after the opening. The third element was the open market operation at the end of June.
Referring to the NCB/SAMBA merger, he said that in y see M&AM & Activity as a sign of dynamism in the economy. O in SAMAn the dip in the foreign currency reserves due to the impact of COVID and lower oil prices, he said that the situation was comfortable with reserves at SR 450 bn by transferring the 40bn SR to the PIF was a strong hit. The positive signals coming from the oil market will support Saudi’s reserves.