A substantial decline in letter of credit (L/C) openings has underlined how Saudi Arabia's economy is still struggling to gain momentum amidst low oil prices.

Other data released this month by the Saudi central bank also shows how the economy is performing sluggishly.

Sharp decline

Economic uncertainty is dampening demand for imports financed by commercial lenders according to the central bank's data.

It indicates the value of new L/Cs opened to bring in items including food, cars, clothing and building materials dropped by more than 20 per cent in January 2017 compared with same month last year.

Gloomy outlook

The Saudi government says gross domestic product will likely grow by just one per cent in 2017 while the IMF has slashed its forecast for Saudi economic growth this year to 0.4 per cent from 2 per cent.

Net foreign assets are shrinking as the government dips into treasury funds to shore up a budget deficit that has now reached US$79 billion, and reserves are falling by as much as 3 per cent a month.

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