Saudi economy grows 1.8% in Q2, non-oil sector loses steam

Saudi Arabia’s economy posted a 1.8 per cent annual growth in the second quarter, according to official gross domestic product (GDP) estimates, but the non-oil sector of the world’s largest oil exporter lost steam.

The figures, published on Monday by the General Authority for Statistics, revised upwards earlier estimates of a 1.5 per cent overall growth in the second quarter, but they also revised non-oil growth to 8.4 per cent from an earlier 10.1 per cent .

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

Saudi Arabia was hit hard last year by the twin shock of the Covid-19 pandemic and record-low oil prices. The economy has rebounded this year, however, amid easing coronavirus-related restrictions, a vaccine roll-out and higher crude prices.

The GDP segment comprising wholesale and retail trade, restaurants and hotels, grew 16.9 per cent in Q2 compared to the same quarter last year, although declining slightly when compared to the first three months of this year.

The pent-up demand that boosted the rebound was expected to lose some steam, economists have said.

“Preliminary GDP data for 2Q2021 released in August points to some moderation in the pace of sequential non-oil GDP growth. This normalisation is to be expected as the boost to activity from the initial reopening of the economy, trapped spending and pent-up demand wanes,” Monica Malik, chief economist at Abu Dhabi Commercial Bank, said in a note last week.