Saudi Arabia’s economy contracted for the second quarter in a row, as the kingdom grapples with low oil prices and its businesses struggle to cope with economic reforms.
The kingdom’s GDP shrank 1 percent from the same period a year earlier, when it expanded 0.9 percent, according to official data released on Saturday.
The economy contracted 0.5 percent in the first three months of this year.
Photo: AFP
Saudi Crown Prince Mohammed Bin Salman is leading the push to transform the biggest Arab economy at a time when crude oil prices are at about half their 2014 peak. However, as authorities seek to reduce the kingdom’s reliance on oil, they are also leading efforts among OPEC members and some other major producers to bolster prices by cutting output.
The kingdom’s oil GDP shrank 1.8 percent in the second quarter, weighing on overall activity. The data also showed how non-oil industries are still struggling with efforts to overhaul the economy and shore up public finances.
The non-oil GDP, the main engine of job creation, expanded below 1 percent, driven mainly by the government sector, the data showed.
“What we’re seeing is stagnation in non-oil activity,” Abu Dhabi Commercial Bank chief economist Monica Malik said.
“Second-quarter data show still very lackluster demand,” even after the government reversed a decision to cut or freeze bonuses and allowances for state employees, she said.
Figures released by the government’s statistics agency also showed that within non-oil GDP, private sector activity grew 0.4 percent, after expanding 0.9 percent in the previous three months.
The government sector expanded almost 1 percent, the construction industry shrank 1.6 percent after contracting 3 percent in the first quarter and petroleum refining expanded 5.8 percent
A Bloomberg survey conducted before Saturday’s release shows that economists expect growth to grind to a halt this year, compared with a growth forecast of 0.5 percent in the previous poll.
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