Saudi first quarter GDP shrinks 3%, hit by oil sector decline

Riyadh - The IMF expects the Saudi economy to grow 2.1% this year.

By Reuters

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Published: Mon 14 Jun 2021, 1:08 PM

Last updated: Mon 14 Jun 2021, 1:16 PM

Saudi Arabia’s gross domestic product fell 3 per cent in the first quarter, slightly less than official estimates and compared with a 1 per cent contraction last year, as a sharp fall in the oil sector pulled back the economy, data showed.

The kingdom’s economy has been hit hard by the twin shock of last year’s historic oil price crash and the Covid-19 pandemic.

The non-oil sector grew 2.9 per cent, from 1.6 per cent growth a year earlier, while the oil sector declined by 11.7 per cent which was a much sharper fall than the 4.6 per cent contraction a year earlier, the General Authority for Statistics said in a statement on Monday.

In flash estimates in May the authority said the economy shrank 3.3 per cent in the first quarter and the non-oil sector grew for the first since the first quarter of 2020.

The non-oil and private sectors are at the centre of Vision 2030, Crown Prince Mohammed bin Salman’s transformation plan to wean the Saudi economy off oil.

Real GDP, an inflation-adjusted measure, shrank 4.1 per cent last year. The International Monetary Fund expects the Saudi economy to grow 2.1 per cent this year.

Saudi Arabia’s private sector expanded by 4.4 per cent in the first quarter and the government sector declined slightly, by 0.4 per cent, the official data showed.

On a quarterly basis, real GDP declined by 0.5 per cent, mainly due to an 8.7 per cent drop in the oil sector, while the non-oil sector expanded by 4.9 per cent compared to the fourth quarter, driven by a 6.3 per cent private sector expansion as well as 1.7 per cent growth in the government sector.

Crude petroleum and natural gas and petroleum refining activities was the only economic activity that did not record growth on a quarterly basis and was also the biggest drag on the quarter’s decline compared to the first quarter of 2020.

Compared to a year earlier, the first quarter saw the highest economic growth in petroleum refining activities, which expanded 21.2 per cent, followed by manufacturing, which grew 8.9 per cent.


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