Second Quarter 2023

KEY ECONOMIC DEVELOPMENTS

Second Quarter 2023
Research and International Deputyship
Economic Research and Reports Department

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Contents

1- Executive Summary 4

2- Global Economy 5

3- Saudi Economy 6

3 - 1 Key Developments in the Real Sector 6

3 - 2 Oil Sector 8

3 - 3 Public Finance 8

3 - 4 Inflation 9

3 - 5 External Sector 10

4- Financial and Banking Sector 11

4 - 1 Developments in the Banking Sector 11

4 - 2 Developments in Insurance, Finance and Capital Markets 11

4 - 3 Banking Technology Developments 12

4 - 4 Key Fintech Developments in Q2 2023 13

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institutions supervised by SAMA, monetary and banking Buraydah
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Saudi Central Bank | Key Economic Developments

Saudi Arabia’s average production of crude oil

in Q2 2023 registered a YoY decline of 3.9%,

1- Executive Summary
bringing the average production to around 10.1
million bpd.

The average price of Arab Light oil recorded a

The global economic growth is expected to rise
YoY decrease of 29.8% in Q2 2023, reaching an
by 3.0% in 2023 and 2024 according to the World
average price of $79.9 per barrel.
Economic Outlook report issued in July 2023
(WEO).
Total actual budget revenues decreased by
15.0% YoY to SAR 314.8 billion in Q2 2023. Total
The global demand for crude oil, according to
actual budget expenditures increased by 9.4%
OPEC estimates in July 2023, decreased by
YoY to SAR 320.1 billion in Q2 2023.
0.4% during Q2 2023 to an average of 101.2
million bpd.
The average consumer price index (CPI)
registered a YoY increase of 2.7% in Q2 2023. It
Projections of the International Monetary Fund
also registered a QoQ growth of 0.6%.
(IMF) indicate that the Saudi economy will grow
by 1.9% and 2.8% in 2023 and 2024, respectively.
Total exports value went down by 14.6% YoY to
about SAR 313.5 billion in Q1 2023.
Quick estimates for Q2 2023 indicate that the
real GDP increased by 1.1% YoY. This growth
Broad money supply (M3) recorded a YoY
is attributed to increases in non-oil activities
increase of 9.1% (SAR 221.6 billion) to nearly
and government services activities by 5.5% and
SAR 2,660.6 billion in Q2 2023.
2.7%, respectively.

Private consumption indicator -consisting of POS

transactions, cash withdrawals, individual and
corporate bank checks cleared at the clearing
houses, and e-commerce transactions using
mada cards- show an increase in consumption
during Q2 2023. It recorded a YoY growth of 5.0%
and a QoQ growth estimated at 0.3%

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 The IMF also expects a decrease in global inflation

Second Quarter 2023

from 8.7% in 2022 to 6.8% in 2023 and 5.2% in 2024;

2- Global Economy such a decrease is expected to be driven by a decline

in commodity prices.

Key Global Economic Developments Key Developments of Global Oil Markets

Global growth is projected to witness low growth Projections of the OPEC in its July report show a

rates during the coming period. This is attributed QoQ decrease of 0.4 million bpd in global demand

to the continuous rise in interest rates that will for crude oil in Q2 2023, bringing the average

increase borrowing costs and slow the growth of demand to 101.2 million bpd. This decrease is

economic activities. In spite of this, the IMF raised attributed to the decrease of about 0.8 million

its projections for global GDP growth slightly by bpd in demand from the OECD Asian and Pacific

0.2 percentage points from its April 2023 forecast countries due to the slowdown in the growth

(World Economic Outlook report). Additionally, of economic activity. Additionally, the OPEC’s

growth rates are expected to decrease from 3.5% in projections indicate a decrease of 0.9 million bpd

2022 to 3.0% in 2023 and 2024; such rates are lower in the global supply of oil to 101.1 million bpd in

than the annual average of 3.8% for the period from Q2 2023 due to a decrease of 0.6 million bpd in

2000 to 2019. It is worth mentioning that advanced supply from OPEC countries (Chart 2).

economies are the main factor behind this decline,

as the GDP is expected to grow by 1.5% in 2023 Chart 2: International Demand and Supply

and 1.4% in 2024. In contrast, the economies of

emerging and developing markets are expected to
see stable growth rates for 2023 and 2024, reaching
about 4.0% and 4.1%, respectively (Chart 1).
mb/d

Chart 1: Growth Projections for Economies

World Demand World Suply

Source: OPEC.

Global Economy Developed Countries Emerging markets and

developing economies

Source: IMF, APRIL 2023.

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Saudi Central Bank | Key Economic Developments

Moreover, the real GDP recorded a YoY increase of

3- Saudi Economy 3.8% in Q1 2023 and a QoQ decrease of 3.9%. This
rise is attributed to a YoY growth of about 5.4%
3-1 Key Developments in and a QoQ increase of 0.7% in non-oil activities. In
the Real Sector addition, oil activities rose by 1.4% YoY. However,
Saudi Economic Outlook oil activities recorded a QoQ decline of about 5.4%
According to the World Economic Outlook (WEO) in Q1 2023. Further, government services activities
report issued in July 2023, the IMFs projections recorded a YoY increase of about 4.9% and a QoQ
the Saudi economy will be 1.9% in 2023; the growth decrease of 2.6% (Chart 4).
is lower than expected in the previous report by
Chart 4: Growth of Real GDP by Main Economic
1.2 percentage points. In contrast, it is projected Activities (YoY)

to grow by 2.8% in 2024. Furthermore, the World

Bank’s projections were close to those of the IMF
as they indicate growth rates of 2.2% and 3.3% for
2023 and 2024, respectively (Chart 3). According
to the IMF’s estimates, inflation in Saudi Arabia is
projected to rise by 2.8% and 2.3% for 2023 and
2024, respectively. Oil activities Non-oil activities
Government activities Gross domestic product
Chart 3: Projections of Key International
Source: General Authority for Statistics (GaStat).
Organizations About GDP Growth at Constant
*Quick estimates.
Prices for Saudi Arabia
In the context of main economic activities, all
activities recorded YoY increases in Q1 2023 except
for manufacturing. Community. social and personal
services increased by 12.9% YoY and 3.7% QoQ.
Transportation, storage and communication came
second with a YoY increase of 9.3% and a QoQ
decrease of 7.6%, followed by wholesale and retail
IMF-July 23 WBG-Jun 23
trade, restaurants, and hotels with a YoY increase
Source: IMF, WBG.
of 7.5% and a QoQ increase of 4.2%. Construction
Real GDP
and building ranked fourth with a YoY increase of
Quick estimates of the General Authority for
5.5% and a QoQ increase of 0.4%. It was followed
Statistics (GaStat) indicate that the real GDP in Saudi
by government services with a YoY increase of
Arabia recorded a YoY increase of 1.1% in Q2 2023.
4.9% and a QoQ decrease of 2.6% (Chart 5).
This growth is attributed to increases of 5.5% in
non-oil activities and 2.7% in government services
activities, despite a 4.2% decline in oil activities.

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 Data of POS transactions by sector in Q2 2023
Chart 5: Growth of Economic Activities (YoY)

Second Quarter 2023

show positive growth in transactions of most
Gross Domestic Product sectors. However, transactions of some sectors
Government Services
Community, Social and Personal Services during that period registered a YoY decrease in
Financial, Insurance, Real Estate and
Business Services
Transport, Storage and Telecommunication
growth, which is as follows:
Wholesale and Retail Trade, Restaurants and
hotels building and construction (10.1%), electronics
Constructio and Building

Electricity, Gas and Water and electrical appliances (9.0%), furniture

Manufacturing
Mining and Quarrying
(6.8%), jewelry (0.6%) and communication (0.2%)
Agriculture Forestry and Fishing
(Chart 7).

Source: General Authority for Statistics (GaStat).

Chart 7: Points of Sale Transactions by
Sectors
Private Consumption Index
Data of the private consumption index consisting
of POS transactions, cash withdrawals, individual
and corporate bank checks cleared at the clearing
houses, and e-commerce transactions using
mada cards show that consumption recorded a
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Annual growth (right axis)

Source: Saudi Central Bank (SAMA).
using mada cards, POS transactions and cash
withdrawals recorded YoY increases of 30.0%, Private Sector Imports Financed by
11.2% and 4.3%, respectively. On the other hand, Banks
individual and corporate bank checks cleared The new letters of credit opened for the private

recorded a YoY decrease of 33.1% (Chart 6). sector imports financed by commercial banks
recorded a YoY increase of 8.6% to SAR 39.6

Chart 6: Private Consumption Index billion in Q2 2023. In contrast, they registered a

QoQ decrease of 1.8% (Chart 8).
Chart 8: Private Sector Imports Financed by
Commercial Banks (New Letters of Credit
Opened)

POS Transactions E-commerce (mada cards)

Cash withdrawals Clearing checks (individuals-companies)
Source: Saudi Central Bank (SAMA).

Private sector imports financed by Annual growth

commercial banks (left axis) (right axis)

Source: Saudi Central Bank (SAMA).

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Saudi Central Bank | Key Economic Developments

Industrial Production Index 3-2 Oil Sector

Data of the general industrial production index Crude Oil Production Developments
(IPI) in Q2 2023 indicate a YOY rise of 0.1%, driven Saudi Arabia’s average production of crude oil
in Q2 2023 recorded a YoY decrease of 3.9% and
by rises of 20.7% and 10.3% in electricity and gas
a QoQ decrease of 3.2%, bringing the average
supplies and manufacturing activity, respectively. production to 10.1 million bpd (Chart 11).
on the other hand, mining and quarrying decreased
by 3.9%. Furthermore, the IPI witnessed a QoQ Oil Price Developments
contraction of 2.1%, driven by decreases of 3.2% in The average price of Arabian Light Crude Oil in Q2

mining and quarrying and 1.9% in Manufacturing. 2023 recorded a YoY decrease of 29.8% and a QoQ

electricity and gas supplies, however, recorded a decrease of 3.1%, reaching an average price of

QoQ rise of 31.5% (Chart 9). $79.9 per barrel (Chart 11).

Chart 9: YoY Growth of Industrial Production Chart 11: Saudi Arabia’s Production of Crude
Index Oil and the Price of Arab Light Oil

Dollar
mb/d

Crude Oil Production Arabic light price (right axis)

Mining and Quarrying Manufacturing
Electricity supply General Index of Industrial
Production
Source: OPEC.
Source:General Authority for Statistics (GaStat).

Cement Sales in Saudi Arabia 3-3 Public Finance

Saudi Arabia’s cement sales in Q2 2023 declined Revenues and Expenditures
YoY by 7.1% to 10.1 million tons and fell QoQ by Total actual budget revenues decreased YoY by

20.6% (Chart 10). 15.0% to SAR 314.8 billion in Q2 2023. Oil revenues
accounted for 57.1% (SAR 179.7 billion) of total
Chart 10: Cement Sales in Saudi Arabia revenues. On the other hand, non-oil revenues
amounted to SAR 135.1 billion, with taxes on goods
and services constituting the largest share of non-
oil revenues at 49.0%.
Million tons

Total actual budget expenditures increased by

9.4% YoY to SAR 320.1 billion in Q2 2023. Current
expenses accounted for 86.4% (SAR 276.6 billion)
Cement sales in Saudi Annual growth (right axis) of total expenditures, and compensation of
Arabia (left axis)
employees constituted the largest share of 47.7%
Source: Cement companies in Saudi Arabia.

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of current expenses. In addition, capital expenditure
Chart 13: Public Debt Developments

Second Quarter 2023

amounted to SAR 43.5 billion, constituting 13.6%
of total expenditures. Accordingly, the budget
recorded a deficit of SAR 5.3 billion in Q2 2023
(Chart 12).

Chart 12: Revenue and Expenditure

Developments

Public Debt (lift axis) Domestic Debt Foreign Debt

Source: Ministry of Finance.

3-4 Inflation
Consumer Price Index
The average general consumer price index
Total Revenues Total Expenditures

Source: Ministry of Finance.

(CPI) recorded a YoY increase of 2.7% and a
QoQ increase of 0.6% in Q2 2023. This growth is
As for the budget performance in the first
attributed to the following YoY increases: housing,
half of 2023, total actual revenues registered
water, electricity, gas and other fuels by 8.6%,
a YoY decrease of 8.1%. In contrast, actual
restaurants and hotels by 5.2% and recreation
expenditures registered a YoY increase of 17.7%.
and culture by 3.2%. On the other hand, clothing
Consequently, the budget recorded a deficit of
and footwear registered the highest YoY decrease
SAR 8.2 billion in the first half of 2023 against
of 2.4% in Q2 2023 (Chart 14).
a surplus of SAR 135.4 billion in the first half of
2022.
Chart 14: Annual Change Rate of Consumer
Price Index
Public Debt
Miscellaneous goods & services

The public debt registered a YoY increase of Restaurants & hotels

Education

2.3% to SAR 989.2 billion in Q2 2023. Domestic Recreation & culture

Communication
Transport
debt recorded a YoY increase of 3.1% to SAR Health
Furnishings household equipment & maintenance

623.5 billion (accounting for 63.0% of total public Housing, water, electricity, gas & other fuels
Clothing & footwear

debt). On the other hand, foreign debt stood at Tobacco

Food & beverages

SAR 365.6 billion (37.0% of the total), with a YoY General index

increase of 1.1% (Chart 13).

Source: General Authority for Statistics (GaStat).

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Saudi Central Bank | Key Economic Developments

3-5 External Sector 24.4% to SAR 180.2 billion compared to about

External Trade SAR 144.8 billion in Q1 2022. The services deficit

Exports value registered a YoY decrease of 14.6% to decreased from SAR 41.4 billion in Q1 2022 to

around SAR 313.5 billion in Q1 2023. This decrease SAR 33.0 billion in Q1 2023. The deficit in the

was due to a decline of nearly 14.9% in the value of secondary income balance decreased by 4.8%

oil exports to SAR 245.4 billion. In addition, non-oil to nearly SAR 41.1 billion compared to SAR 43.2

exports (including re-exports) decreased by 13.1% billion in Q1 2022. The primary income balance

to about SAR 68.1 billion. Oil exports constituted recorded a decrease of 52.9% to SAR 5.7 billion

78.3% of total exports, while non-oil exports (not in Q1 2023 compared to about SAR 12.0 billion

including re-exports) constituted 16.8% of total in Q1 2022.

exports. Moreover, the value of imports (CIF)

increased by 18.1% YoY to around SAR 186.4 billion Capital Account

in Q1 2023 (Chart 15). Capital account registered outflows of SAR 3.4

billion in Q1 2023 against outflows of around

Chart 15: External Trade SAR 1.8 billion in Q1 2022.

Financial Account
Net direct investments increased by SAR 27.0
billion in Q1 2023 due to an increase of SAR
35.1 billion in net acquisition of financial assets
abroad against a smaller increase in domestic
net incurrence of liabilities by around SAR 8.1
billion. Net portfolio investments rose by SAR
Re-export Petroleum Exports Non-petroleum exports
Source: General Authority for Statistics (GaStat).
63.2 billion in Q1 2023 against a decrease of
SAR 1.6 billion in Q1 2022. Moreover, other net
Balance of Payments investments surged by approximately SAR 48.3
Current Account billion against a rise of about SAR 151.0 billion
Preliminary estimates indicate a surplus of SAR in Q4 2021. Net reserve assets fell by SAR
66.4 billion in the current account balance in Q1 79.4 billion in Q1 2023 against a drop of SAR
2023 compared to a surplus of SAR 148.5 billion 15.0 billion in Q1 2022 as other reserve assets
in Q1 2022. This is attributed to a surplus of SAR declined by SAR 80.8 billion (due to a decrease
101.9 billion in the balance of goods and services in investment in securities item by SAR 101.5
against a surplus of SAR 179.7 billion in Q1 2022. billion despite the increase of currency and
The balance of goods recorded a surplus of SAR deposits item by SAR 20.6 billion) against a fall
134.9 billion as exported registered a surplus of of SAR 13.9 billion in Q1 2022.
SAR 315.1 billion against about SAR 365.9 billion
in Q1 2022. Imported goods (FOB) increased by

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4- Banking and Bank Loans by Type

Second Quarter 2023

Financial Sector
Real estate loans recorded a YoY rise of 14.6
percent (SAR 93.0 billion) at end-Q2 2023,
constituting 29.6 percent of total bank credit. On
Developments in the Financial
the other hand, total consumer loans recorded a
Sector
YoY decrease of 0.4% (SAR 1.8 billion) in Q2 2023,
Money Supply
representing 18.0% of total bank credit (Chart 18).
Broad money supply (M3) recorded a YoY increase
of 9.1% (SAR 221.6 billion) to SAR 2,660.6 billion
Chart 18: Bank Loans by Type
and a QoQ increase of 2.0% (SAR 52.2 billion) in
Q2 2023 (Chart 16).

Chart 16: Broad Money (M3) Components

Real estate loans Consumer loans

Annual growth in total bank loans (right axis)

Source: Saudi Central Bank (SAMA).

Demand Deposits Time and savings deposits

Other quasi- money deposits Currency in circulation
Annual growt h rate of money supply (M3) (right axis)
4-2 Developments in Insurance,
Source: Saudi Central Bank (SAMA). Finance and Capital Markets
Bank Credit Insurance Market Developments
Bank credit extended to the private and public The insurance market witnessed a YoY increase
sectors registered a YoY increase of 10.2% (SAR of 26.2% in the total gross written premiums
229.4 billion) to SAR 2,471.3 billion and a QoQ (GWP) to around SAR 18.9 billion and a QoQ
increase of 2.5% (SAR 60.3 billion) during Q2 2023
increase of 43.6% in Q1 2023. This increase
(Chart 17).
came as a result of the health insurance GWP
increasing by 32.6% YoY. Moreover, while the
Chart 17: Bank Credit by Sector
general insurance GWP increased by 18.1%
YoY, protection and savings insurance GWP
decreased by 14.7% YoY (Chart 19).

Bank credit to the private sector Bank credit to the public sector
Bank credit growth (right axis)

Source: Saudi Central Bank (SAMA).

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Saudi Central Bank | Key Economic Developments

shares recorded a YoY decrease of 34.3% to

Chart 19: Gross Written Premiums (GWP)
about SAR 325.0 billion and a QoQ increase of
20.5% (Chart 21).

Chart 21: The Tadawul All Share Index (TASI)

Point
Protection and saving General Insurance
Health
Source: Saudi Central Bank (SAMA).

Finance companies General Index of Stock Quarterly growth

Price (left axis) (right ax is)
The total credit offered by finance companies
Source: Saudi Stock Exchange (Tadawul).
recorded a YoY increase of 11.0% to SAR 78.9
The traded value of Sukuk and Bonds Market
billion in Q1 2023. It also recorded a QoQ increase
recorded a QoQ decrease of 37.0% to SAR 4.4
of 4.6%. Moreover, medium enterprise finance
recorded the highest YoY rise of 23.7%, with a billion in Q2 2023. Moreover, the Sukuk and

QoQ increase of 14.9% (Chart 20). Bonds Market Index also recorded a QoQ decline
of 0.1% to close at 943.8 points.
Chart 20: Credit Offered by Finance Companies
by Sector
4-3 Banking Technology
Developments
SARIE System
The total value of the Saudi Arabian Riyal
Interbank Express (SARIE) system transactions
went down by 18.3% YoY to SAR 11,148.1 billion
in Q2 2023. Total customer payments stood at

Retail Microfinance Small Enterprises

around SAR 2,790.4 billion, with a YoY rise of
Annual growth (right axis) Medium Enterprises
4.4%. The value of single payment transactions
Source: Saudi Central Bank (SAMA).
totaled SAR 1,436.9 billion, whereas the total
Capital markets developments value of bulk payment transactions amounted
The Tadawul All Share Index (TASI) recorded to nearly SAR 1,353.5 billion. The total value of
a YoY decrease of 0.6% to 11,459.0 points at interbank payments reached SAR 8,069.6 billion,
end-Q2 2023, while it recorded a QoQ increase with a YoY decline of 20.7%.
of 8.2%. The number of traded shares increased
by 8.1% YoY to 12.6 billion and increased by
26.4% QoQ. Additionally, the total value of traded

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Mada 4-4 Key Fintech Developments in

Second Quarter 2023

The total number of ATM transactions in Q2 2023 Q2 2023
was about 385.5 million, with cash withdrawals The Saudi Central Bank (SAMA) licensed a com-
totaling SAR 142.4 billion, including transactions pany in the field of payment and two companies
through banks’ network and Mada. Total POS to practice buy-now-pay-later (BNPL) services
terminal transactions stood at about 2,174.0 in Saudi Arabia, bringing the number of licensed
million, with sales totaling SAR 153.2 billion. fintech companies to three during Q2 2023. This
Moreover, the number of ATMs totaled about 16.1 step comes as part of SAMA’s role in empower-
thousand, the number of ATM cards issued by ing the fintech sector through various activities
domestic banks stood at about 44.9 million, and aimed at supporting the private sector and at-
the number of POS terminals reached around 1.6 tracting investors and companies that bring add-
million. ed value to the sector.

Clearing
In addition, the preceding period witnessed a
As for statistics on clearing in Q2 2023, the
rapid development in the fintech legislation, with
number of (outgoing and incoming) bank
the issuance and updating of several regulations,
checks cleared at the clearinghouses totaled
rules, and frameworks that contribute to the de-
around 244.0 thousand, with a total value of
velopment of supervision, control, and licensing
SAR 52.3 billion. The number of individual and
mechanisms. These include: the issuance of the
corporate checks totaled nearly 204.8 thousand
Open Banking Framework, and the update of the
with a total value of SAR 26.1 billion, and the
Regulatory Sandbox Framework. This comes as a
number of interbank checks totaled about 39.2
result of SAMA’s efforts to achieve several nation-
thousand with a total value of SAR 26.2 billion.
al strategic goals. Moreover, SAMA has recently
issued a number of rules and regulations that
contribute to raising the efficiency and services
of fintech companies, such as the Implementing
Regulations of the Law of Payments and Payment
Services. SAMA has also launched a public con-
sultation on the rules regulating buy-now-pay-
later (BNPL) companies, performing its supervi-
sory and oversight role on BNPL companies and
continuing its efforts to develop the finance sec-
tor in general, and the fintech sector in particular.

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 Saudi Central Bank | Key Economic Developments

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