Saturday, Apr 30, 2011

Gulf News

Dubai Saudis are hitting the shops to spend 53 billion Saudi riyals ($14.1 billion, Dh51.8 billion) dished out by the government following unrest in the Arab world.

Data released by the Saudi Arabian Monetary Authority (SAMA) late last week shows that Saudis are spending millions on big-ticket purchases such as new cars and home appliances, with point of sale transactions in March growing 22.6 per cent month on month to 7.5 billion riyals.

The number of transactions rose 18.7 per cent to 15.1 million compared with the month earlier, showing that Saudis are choosing to spend bonuses and government payouts made as part of King Abdullah Bin Abdul Aziz’s huge funding package announced earlier this year.

“The one off bonuses that were paid to public sector and private sector workers will have an impact over the next two months or so,” John Sfankianakis, at Banque Saudi Fransi in Riyadh, told Gulf News.

He added that another set of bonuses and payouts to Saudi public and private sector workers — as well as some expatriates — will have a similar effect when they come forward in Nov-ember

Inflation

Sfankianakis’s report, published the same day as the SAMA figures, also stated inflation in Saudi Arabia is set to rise from 5.1 per cent to 5.6 per cent by the end of this year, as the economy adjusts to the impact of a week dollar and rising rents in the kingdom. The rise in global food prices, as well as commodity prices worldwide, will also have an impact.

That said, Sfankianakis said he did not believe the government’s payouts — which in some cases amount to a 17 per cent one-time pay rise — would contribute to inflation because they are one off measures.

“What will have an effect on inflation will be what happens to the value of the dollar and the value seems to be in decline,” he said. He also said that housing supply — which in no way matches a massive demand for homes — would be an issue going forward.

According to Banque Saudi Fransi’s report, a jump in oil prices helped fund the bonuses and payouts, resulting in government spending clocking in 45 per cent higher than targets set out in the country’s budget.

By Orlando Crowcroft?Business News Editor

Gulf News 2011. All rights reserved.