October is Menopause Awareness Month
The report on Thursday said that price rises could accelerate in the first quarter of 2010, should dollar weakness be sustained over the short-term, firming up imported inflation. It forecast inflation rate to reach 4.6 in 2010. In July 2008, Saudi inflation peaked at more than 11 per cent.
“We believe the dollar should strengthen somewhat during 2010, but domestic inflation is likely to stay at historically high levels,” said John Sfakianakis, chief economist at BSF.
On Wednesday, the Saudi central bank had said that the kingdom would face inflationary pressures during the fourth quarter, which will be mostly due to seasonal factors. However, the central bank and finance ministry do not issue full inflation forecasts.
Inflation in Saudi Arabia rose to an annual 4.4 per cent in September from 4.1 per cent in August, its first increase in four months, which coincided with the month of Ramadan, when consumer demand increases.
Moreover, the report said Saudi Arabia’s imports are set to face their steepest decline in 15 years in 2009, as slower economic conditions sparked off caution among importers, consumers and risk-averse businesses.
It added that this is not a uniquely Saudi phenomenon. World Trade Organisation data shows global imports fell by almost a third in the second quarter from the year earlier.
While confidence and stability are showing signs of gradually returning to the Saudi economy, the latest import data provide evidence that the pace of growth and appetite for risk will be measured at best. “We expect the value of Saudi imports to decline to $89 billion in 2009 — a drop of almost 12 per cent from a record $100.6 billion in 2008, marking the biggest decrease since 1994,” it said.
“At a time when consumer spending is subdued compared with last year, we think retailers are hesitant to import large consignments at a higher cost. The recent cycle of dollar weakness that pushed the greenback to a 14-month low versus the euro last month is passing through to Saudi imports and will have a knock-on effect on the wider economy,”
it added. Prolonged dollar weakness could make imports more pricy in the final months of 2009, leading some importers to hold back on replenishing stocks until they are certain that momentum has returned to economic recovery.
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