Weekly Market Brief – 09/18/2020

Saudi Arabia Macroeconomic Developments: Saudi Arabia’s goods exports decreased by 53.6 percent YoY in Q2, according to the General Authority for Statistics. Oil exports fell 61.8 percent while non-oil exports fell 25.5 percent as international trade slowed at the height of global pandemic lockdowns. Imports from the U.S. totaled SAR12.8 billion ($3.4 billion) while imports from China totaled SAR27.1 billion ($7.2 billion), counting as the Kingdom’s top two trading partners. Consumer prices rose 6.2 percent YoY in August. Food prices recorded the highest annual increase (+13.5 percent) while transportation costs (+8.2 percent) also increased. Amid low oil demand due to the global pandemic, fuel prices declined more than 25 percent, offsetting broad-based increases in other categories. While the value-added tax (VAT) increase in July caused a jump in prices, month-on-month inflation in August was only 0.2 percent.

U.S. Macroeconomic Developments: Consumer sentiment ticked up in September but remains well below pre-virus levels. Notably, only 16 percent of consumers expected the economy to worsen over the next year, the smallest proportion since 2015. For the first time since 2014, more respondents reported income declines rather than gains. Industrial production rose 0.4 percent in August as the sector continues to rebound, but the pace of the recovery has slowed. The latest figure missed market expectations by more than a half percent. Mining production fell 2.5 percent as weather events in the Gulf region caused temporary shutdowns. Motor vehicle production fell back 3.7 percent after surpassing pre-pandemic levels in July.