RIYADH: Saudi Arabia’s real GDP growth is expected to slow to 1.2 percent in 2016, but recover to 2 percent in 2017 as the pace of fiscal consolidation eases and to settle around 2¼ -2½ percent over the medium-term, the International Monetary Fund (IMF) has said.
Inflation has risen in recent months to over 4 percent as energy and water prices have been increased, and is expected to ease to 2 percent in 2017, the IMF statement released following the conclusion of consultation with Saudi Arabia.
Bank deposits have declined, but growth of credit to the private sector remains strong. Capital buffers are high, NPLs low, and banks are well provisioned against loan losses. SIBOR has moved higher in recent months and the spread to US rates has widened as liquidity has tightened, it said. SAMA relaxed the loan-to-deposit ratio in February and increased its reverse repo rate by 25bp to 0.5 percent in December.
