The Saudi non-oil sector recorded its lowest level since last October.
Despite the decline in production growth within 10 months, production prices recorded their highest rate in a whole year.
The significant increase in production prices comes despite the modest rise in input costs, according to the Purchasing Managers’ Index (PMI).
Saudi non-oil sector
Despite the decline in the non-oil sector figures, Saudi Arabia said its foreign reserves cover the country’s needs for a full three years.
The Kingdom indicated that foreign reserves amounted to 1.67 trillion riyals ($450 billion) until the end of last June.
During the month of June alone, the kingdom’s imports amounted to 46 billion riyals ($12.27 billion).
The rate of coverage of foreign reserves for imports is 6.1 times the global average of only six months, and it is 505% higher than the global average, according to the newspaper.
These reserves help finance part of the budget deficit resulting from the decline in oil prices, pay debts and provide imports of goods in exceptional circumstances.
The reserve assets of the Saudi Central Bank “SAMA” include gold, special drawing rights, reserves with the International Monetary Fund, foreign exchange, and deposits abroad, in addition to investments in securities abroad.
The stability in the rate of coverage of foreign reserves for imports in June, compared to May, came as a result of the increase in the value of imports and foreign reserves at almost the same pace.
In June, imports rose by 2.5 percent, equivalent to 1.1 billion riyals ($290 million), while foreign reserves rose by 2%, equivalent to 32.9 billion riyals ($8.770 billion).
The foreign reserve measures the country’s ability to cover imports, and one of the benefits of foreign reserves is to increase confidence in the monetary policy of the country that holds the reserves. It also supports confidence in the exchange rate of the country’s national currency.
Meanwhile, Saudi reserve assets witnessed a decline of 1%, or 16.5 billion riyals ($4.4 billion) during the month of July.
The Saudi Central Bank stated a decline in reserve assets from 1.672 trillion riyals ($445.8 billion) in June 2021.
On an annual basis, reserve assets declined by 24.25 billion riyals ($6.46 billion), down from 1.678 trillion riyals ($448 billion).