The Saudi economy grew 1.8% in Q2 but the non-oil sector evaporated

Diego Gray/ September 13, 2021/ World Economy/ 0 comments

DUBAI (Reuters) – Saudi Arabia’s economy grew 1.8% year-on-year in the second quarter on official gross domestic product (GDP) estimates, but the non-oil sector, the world’s largest oil exporter, lost steam.

The figures, released by the General Statistics Authority on Monday, revised the previous estimate of 1.5% of total growth in the second quarter, but they also revised non-oil growth from the previous 10.1% to 8.4%.

On a quarter-on-quarter basis, the Saudi economy grew 0.6% compared to the first three months of the year, with the oil sector boosting growth.

Last year, Saudi Arabia was hit hard by the double whammy of the Kovid-1 pandemic epidemic and record oil prices. Lowering coronavirus-related restrictions, bringing in vaccines and raising raw prices have revived the economy this year.

The GDP segment, which includes wholesale and retail trade, restaurants and hotels, grew 16.9% in Q2 compared to the same quarter last year, although it declined slightly compared to the first three months of this year.

Budget-boosting paint-up demand, which triggered a revival, was expected to lose some steam, budgeters said.

Preliminary GDP data for 2Q2021, released in August, shows some improvement in the pace of sequential non-oil GDP growth. This normalization is expected to trigger an early resumption of the economy, reducing stagnant spending and rising demand, ”Monica Malik, chief economist at Abu Dhabi Commercial Bank, said in a note last week.

Saudi Arabia’s main sovereign investor, the Public Investment Fund-led domestic investment program, is expected to be the main driver of economic growth.

London-based Capital Economics said the recovery in the non-oil sector has slowed in recent months, as opposed to the oil sector, which has strengthened due to increased production.

“OPEC + agrees … to further increase oil production, it will support mechanically strong GDP growth and more than facilitate activity in the non-oil sector,” it said in a note last week.

Disclaimer: The views, suggestions, and opinions expressed here are the sole responsibility of the experts. No World Technosys journalist was involved in the writing and production of this article.

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