The liquidity of the Saudi economy has shown robust growth, reaching a peak at the end of March 2024 at SR2,823,745 million. This represents an annual growth rate of 8.3 percent, an increase of over SR215 billion compared to the previous year. The monthly growth was estimated at 2.5 percent, with an increase of about SR67,553 million compared to the end of February 2024. This increase in liquidity is seen as a positive sign for economic and commercial activities, contributing to economic development and GDP growth, and aligning with the goals of Saudi Vision 2030.
The growth in liquidity can be attributed to the increase in total money supply (M3) and demand deposits, which make up the largest contribution to the total money supply at around 49.8 percent. Demand deposits reached SR1,407,114 million, showing an annual growth of over SR52,722 million, an increase of 3.9 percent compared to the previous year. Time deposits and savings deposits also saw growth, contributing 29.9 percent to the total money supply with a value of SR843,248 billion. This marked an annual increase of over SR144 billion, a growth rate of 20.7 percent compared to the previous year.
Cash in circulation outside banks contributed around 8.1 percent to the total money supply, with a value of SR227,491 million. This saw an annual growth of over SR19,938 million, with a growth rate of 9.6 percent compared to the previous year. Other quasi-cash deposits, which include resident deposits in foreign currencies, deposits against documentary credits, existing transfers, and repurchase operations, contributed around 12.2 percent to the total money supply, with a value of SR345,892 million. Overall, these figures highlight the strength and stability of the banking and financial sector in Saudi Arabia.
The increase in liquidity is seen as a positive indicator for the Saudi economy, supporting economic growth and development. The growth in demand deposits, time deposits, and savings deposits reflects confidence in the banking sector and its ability to facilitate economic activity. Cash in circulation outside banks also plays a significant role in the total money supply, contributing to the liquidity of the economy. The growth in quasi-cash deposits further demonstrates the diverse range of financial instruments available in the Saudi market, catering to the needs of both residents and businesses.
The consistent growth in liquidity aligns with the goals of Saudi Vision 2030, which aims to diversify the economy, reduce dependence on oil revenues, and stimulate economic growth. The robust liquidity levels are expected to support ongoing economic reforms and initiatives aimed at promoting sustainable development. As a key contributor to GDP growth, liquidity plays a crucial role in driving economic activity and creating opportunities for investment and growth. By maintaining strong liquidity levels, Saudi Arabia is well-positioned to achieve its long-term economic objectives and enhance its position as a leading economy in the region.
In conclusion, the liquidity of the Saudi economy has shown strong growth, reaching a peak at the end of March 2024. This growth is attributed to the increase in total money supply, demand deposits, time deposits, savings deposits, and other quasi-cash deposits. These figures reflect the strength and stability of the banking and financial sector in Saudi Arabia, supporting economic activity and contributing to the goals of Saudi Vision 2030. With ongoing reforms and initiatives aimed at diversifying the economy and promoting sustainable development, the continued growth in liquidity bodes well for the future of the Saudi economy.
