Saudi Arabia shows some tightness in the local financial system, reflecting a scarcity of corporate deposits, but this appears to be abating and might in any case reflect strong investment growth in the non-oil economy. Local firms continue to report strong growth in new orders, with exchange rate movements helping make non-oil exports more competitive. However, the flip side is an increase in import costs which firms are finding difficult to absorb, according to a report by Samba Financial Group.
Samba extended its macroeconomic forecast and now expects average real GDP growth of just over 3.5 percent in 2013-14, but activity in the nonoil economy should continue at a 5 percent pace.
