JEDDAH: Saudi Arabia exported SR37.13 billion worth of nonoil products in the first quarter of 2011, registering 14 percent rise compared to the same period in the previous year when exports stood at SR32.45 billion.
On the other hand, imports showed only a 7 percent increase of SR98.11 billion compared to SR91.58 billion in the first quarter of 2010, according to a report of the Central Department of Statistics published by the Saudi Press Agency on Saturday.
“First quarter export data show a healthy increase based on global demand for petchem products and plastics. Imports have also increased at a good pace based on domestic demand yet the double percentage difference between exports and imports is very good news for the country's current account which is on a surplus path this year,” John Sfakianakis, chief economist at Banque Saudi Fransi, said.
Jarmo T. Kotilaine, chief economist at the National Commercial Bank, said the latest numbers on Saudi nonoil exports highlight the strong momentum created by the recovery of global trade flows and in particular the continuing robust development of the Asian emerging markets.
The data on shipping destinations reveals the deepening commercial relationship between Saudi Arabia and its Asian neighbors, above all China, a pattern that is also to an extent reflected by the shifting profile of the Kingdom's oil exports.
The overall numbers distort the nature of this mutual dependency in as much as a significant proportion of the goods shipped to the UAE and even Singapore are ultimate destined for the large growth economies of Asia. India is a particularly important destination for the re-exports from the UAE.
“The strong Asian demand underpins the large investments made in the Saudi petrochemicals industry which now accounts for a lion's share of the Kingdom's nonoil exports. But this success has come with new challenges as it constitutes a growing source of demand for the country's hydrocarbons where the spare supply cushion is gradually dwindling in view of the global demand dynamics. Clearly, efforts will have to redoubled to develop also the other non-oil exports so as to support sustainable diversification,” Kotilaine said.
The fact the export growth so decisively outpaced import growth is likely to an extent the result of the period of deepening political uncertainty in region during the early spring months. Q1 also predates the major spending stimulus undertaken later in the spring. “With Saudi growth picking up and disposable income increasing in Q2, we can expect import growth to accelerate as the year goes on,” he added.
Petrochemicals topped the list of non-crude exports at SR12.35 billion accounting for 31 percent of the total exports followed by SR12.29 billion worth plastic products at 26 percent.
During the period SR2.91 billion worth food items were exported which accounted for 9 percent and the re-export of goods stood at SR4.04 billion and the remaining commodities valued at SR5.55 billion were also exported.
"Prices of much of the Kingdoms nonoil exports, such as petrochemicals and plastics, are linked to oil prices, so the higher oil prices during the first quarter clearly lifted the value of nonoil exports. Imports were stimulated by the Kingdom's strengthening economy. Similar trends probably occurred during the second quarter, " Paul Gamble, head of research at Jadwa Investment, said.
China came at the top of the Saudi exporting countries with exports worth SR4.85 billion, accounting for 26 percent of exports, and United Arab Emirates second with SR3.66 billion. Singapore SR2.41 billion was third largest destination of Saudi exports followed by Jordan with SR1.6 billion while goods valued at SR24.6 billion were exported to other countries.
Electrical goods and appliances were the highest imported items at SR27.1 billion at 10 percent and automobiles at SR16.1 billion while food items came third place with SR14.45 billion and metal products at SR13.45 billion and other goods at SR27.03 billion.
The Kingdom imported SR12.46 billion worth of goods from the US, SR11.46 billion from China, SR7.34 billion from Japan, SR7.04 billion from Germany and SR59.83 billion from rest of the world.
While imports from the Gulf Cooperation Council countries reached SR6.5 billion in the first quarter, Saudi exports to the region stood at SR6.52 billion.
The Kingdom’s exports to the UAE were SR3.05 billion, and imports from there were SR4.28, exports to Kuwait were put at SR1.2 billion and imports at SR406 million. Saudi exports to Qatar were worth SR1.14 billion against SR296 million imports and exports to Oman were SR603 million against SR562 million imports.
Saudi Arabia exported goods worth SR530 million to Bahrain and imported SR957 million worth of products from that country.
Saudi Arabia is a highly import-dependent economy and its appetite for everything from machines to vehicles and foodstuffs is high. The US is still the largest exporter into Saudi Arabia but China is second with a difference of $266 million. Japan and Germany followed but it remains to be seen how second and third quarter import data reflect a general decline in Japanese exports due to a short-term fall in manufacturing output following the Fukushima accident. Vehicles imports from Japan are fully recovering and they should be reflected in third quarter import data. All in all import data indicate a healthy pick up in domestic demand and in turn reflecting a positive economic environment, Sfakianakis said.
Source : Arab News, Jul 17, 2011 00:18