Saudi Economy's Liquidity Surges To Historic High Of SAR 3 Trillion By End Of February 2025

Saudi Arabia's liquidity levels have reached a new peak, hitting SAR3.033 trillion by the end of February 2025. The Saudi Central Bank (SAMA) reported an annual rise of SAR277.49 billion, marking a 10.1% increase from SAR2.756 trillion in February 2024. This growth is evident in the broad money supply (M3), which reflects the overall economic health.

The broad money supply (M3) consists of four main components. Demand deposits hold the largest portion, making up 48.5% or SAR1.47 trillion at February's end. Time and savings deposits follow closely, contributing 34% with SAR1.031 trillion. Quasi-cash deposits account for 9.7%, totalling SAR293.683 billion, while currency in circulation outside banks represents 7.8%, valued at SAR237.905 billion.

Monthly liquidity also saw an increase of SAR67.543 billion, a 2.3% rise from January's end when it was SAR2.966 trillion. Such liquidity levels are crucial for supporting economic activities and trade, playing a significant role in driving growth within the economy.

Quasi-cash deposits include various financial instruments such as residents' foreign currency deposits, deposits backed by letters of credit, ongoing transfers, and repurchase agreements (repos) conducted by banks with private entities.

The domestic liquidity framework is structured around different money supply measures: M1 includes currency outside banks and demand deposits; M2 adds time and savings deposits to M1; M3 encompasses M2 along with quasi-cash deposits.

This robust liquidity growth signifies a healthy economic trajectory for Saudi Arabia, reflecting positively on its financial stability and development prospects.

With inputs from SPA