Saudi Arabia’s economy grew 1.5% in Q2, first expansion since pandemic

Saudi Arabia’s economy grew 1.5 per cent in the second quarter, year-on-year, the first expansion since the pandemic, fuelled by a 10.1 per cent growth in the non-oil sector, according to flash government estimates on Monday.

Seasonally-adjusted real gross domestic product (GDP) grew 1.1 per cent in the second quarter compared to the first quarter, the General Authority for Statistics in Saudi Arabia said in a statement.

The International Monetary Fund expects Saudi Arabia’s economy to grow by 2.4 per cent this year, after the kingdom’s economy contracted 4.1 per cent in 2020 due to the twin shock of the Covid-19 pandemic and lower oil prices.

“The annual growth, particularly for real non-oil GDP, reflects the low base from last year with the pandemic,” said Monica Malik, chief economist at Abu Dhabi Commercial Bank.

“The quarterly GDP growth points to a further pick-up in activity, with the oil sector benefiting from higher production,” she said.

The oil sector contracted seven per cent year-on-year basis, but expanded 2.5 per cent on a seasonally-adjusted quarter-on-quarter basis.

Saudi Arabia is trying to boost the non-oil sector through a multi-trillion dollar spending push that will require state companies to cut the dividends they pay the government to boost capital spending.

Crown Prince Mohammed bin Salman, architect of the Saudi Vision 2030 programme, has said the state-backed Public Investment Fund (PIF) will pump at least SR150 billion ($40 billion) into the local economy each year through 2025. -- Reuters