Jadwa Investment kept its forecasts for the Saudi inflation unchanged at 3% for this year, expecting consumer spending to remain under pressure at least until the end of the year.
Jadwa Investment also maintained its expectation for the Kingdom’s inflation at 3.2% in 2021.
“In the remainder of 2020, we still expect monthly decline in prices until the end of the year as a result of subdued consumption, with businesses and retailers lowering end prices and, in some instances, absorbing some part of the VAT rises in the short term,” the investment bank said in a recent report.
The main risk to this forecast is related to a second wave of COVID-19 in the Kingdom, which would likely affect consumption and prices negatively in the fourth quarter of 2020 or in early 2021.
Looking ahead into Q4, some sectors are still not predicted to hit full capacity until at least year-end. This includes the sectors of travel, hotels and restaurants as well as tourism and entertainment.
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