Gulf Central Banks Witness Substantial Growth in Foreign Assets and Money Supply by 2024
In an impressive demonstration of financial resilience, the net foreign assets held by Gulf Cooperation Council (GCC) central banks have surged to approximately US2 billion as of 2024, marking a robust increase of 6.3 percent from the previous year. This significant data comes from a comprehensive report published by the Statistical Centre for the Cooperation Council for the Arab Countries of the Gulf (GCC-Stat). Such growth indicates not only the strength of individual member economies but also the collective financial stability of the region amidst global economic fluctuations.
Among the highlights of the report are noteworthy developments in narrow and broad money supply metrics. By the conclusion of 2024, the GCC’s narrow money supply (M1), which primarily encompasses cash and demand deposits, reached an estimated US1 billion. This represents a commendable year-on-year increase of 10 percent. In parallel, the broader measure of money supply (M2) — which includes M1 alongside savings and time deposits — stood at around US.76 trillion, reflecting a 9.3 percent increase compared to the end of 2023.
Despite the robust growth of M2, the first three quarters of 2023 saw M1 facing challenges, primarily due to a noticeable decline in cash deposits. However, the financial landscape underwent a notable turnaround in 2024, thanks to a resurgence in demand deposits, which recorded substantial monthly increases relative to the same periods a year prior. This revival illustrates a shifting consumer confidence and a growing inclination towards liquidity in banking transactions, attributes that are crucial for sustainable economic growth.
Additionally, the category of quasi-money — which includes various forms of savings and time deposits — continued to register monthly growth, albeit at a decelerated pace over the year. Currency in circulation outside of bank premises also experienced moderate growth rates, contributing to the overall expansion in the money supply alongside quasi-money. This development implies a shifting dynamic within the financial behaviors of consumers in the GCC, as individuals and businesses adapt to changing economic conditions and preferences.
The increase in foreign assets, alongside the demonstrated liquidity in the market, accentuates the sturdy financial standing of the GCC region. It signals a robust monetary framework capable of withstanding external shocks while providing essential support to member states’ economies. As the region continues to navigate the complexities of a post-pandemic world, such indicators of financial health will be vital for sustaining growth and attractiveness as a business hub.
Furthermore, the augmented foreign assets are partially a response to global economic initiatives and factors, including rising oil prices and increased production capabilities. Coupled with ongoing diversification efforts within GCC economies, this growth serves to bolster industry confidence and position the region favorably for both domestic investments and foreign direct investment (FDI). Initiatives aimed at diversifying economies away from dependency on oil production have garnered significant international attention and could pave the way for innovative funding solutions and investment strategies.
As the GCC regional economies continue to solidify their footing, the successful management of monetary policy, coupled with prudent fiscal measures, will be imperative. Stakeholders ranging from policymakers to investors will need to remain attentive to these financial metrics to not only maximize growth opportunities but also mitigate risks associated with potential economic volatility.
In conclusion, the continued ascendency of foreign assets and the growth of money supply metrics encapsulate a narrative of resilience and recovery in the Gulf region. These trends underscore the GCC’s commitment to enhancing its financial landscapes and preparing for the challenges and opportunities that lie ahead in a rapidly evolving global economic environment.
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