Saudi Arabians are borrowing more money to cover education, transportation and furniture & durable goods purchases, according to Saudi Arabian Monetary Authority data.
The value of loans taken out to cover such expenditures crossed SAR 31 billion in the first quarter of 2018, according to the official figures. This compared with a figure of just more than SAR 14 billion in the same quarter of 2017.
The amount of money borrowed for renovation and home improvement, however, remained almost unchanged at SAR 28.6 billion at the end of Q1 2018.
Education borrowings totalled almost SR 3.7 billion at the end of Q1, around 3.5 times more than the figure a year ago. Loans taken out to buy furniture & durable goods leapt from SR 4.36 billion in Q1 2017 to SR 11 billion this year. Borrowing to cover the cost of vehicles and private transportation almost doubled from a year ago to reach SR 16.3 billion at the end of Q1 this year.
Analysts are linking this sudden rise in borrowing to inflation, which has risen following the imposition of the 5% value added tax at the start of the year. This has particularly impacted food prices, which rose 5.7% in April on the back of increases in fish, meat and poultry prices.
Jadwa Investment has projected an inflation rate of 3.1% for the full year, ‘due to higher higher imported inflation, and higher costs borne by local food and agriculture companies’.
Despite the high headline inflation rate, Jadwa Investment believes that the Citizen’s Account and public sector employee allowances will help Saudi nationals, ‘cope with inflationary pressures over the course of year’.