UPDATE 2-Saudi Arabia’s economy returns to growth after pandemic crisis
(Add quote from economist, OPEC context)
DUBAI, Aug.9 (Reuters) – Saudi Arabia’s economy grew for the first time since the coronavirus pandemic in the second quarter, fueled by 10.1% growth in the non-oil sector, flash estimates show from the government on Monday.
The data, which showed economic growth of 1.5% from a year ago, prompted economists to expect faster expansion in the second half of the year, with the oil sector benefiting from higher output.
“Quarterly GDP growth indicates a further upturn in activity, with the oil sector benefiting from higher output,” said Monica Malik, chief economist at Abu Dhabi Commercial Bank.
The kingdom’s economy contracted last year due to the double shock of the COVID-19 pandemic and falling oil prices.
Seasonally adjusted real gross domestic product rose 1.1% in the second quarter from the first quarter, Saudi Arabia’s General Statistics Authority said in a statement.
The International Monetary Fund expects the Saudi economy to grow 2.4% this year. James Swanston, an economist at Capital Economics, said it could grow twice as fast with further easing of the pandemic brakes and the agreement of oil producers to increase production.
“Overall, we forecast real GDP growth of 4.8% this year and 6.3% year-on-year in 2022,” Swanston said.
The oil sector, which accounts for about 25% of economic output which is expected to exceed $ 700 billion this year, contracted 7% year-on-year, but grew 2.5% year-on-year.
OPEC + ministers agreed last month to increase oil supplies from August to cool prices which have hit 2.5-year highs as the global economy recovers from the pandemic.
Saudi Arabia’s non-oil sector grew 1.3% quarter-on-quarter.
The kingdom is trying to boost the non-oil sector with a multibillion-dollar spending surge that will force state-owned enterprises to cut dividends they pay the government to increase capital spending.
Crown Prince Mohammed bin Salman, architect of the Saudi Vision 2030 program, said the state-backed Public Investment Fund (PIF) would inject at least 150 billion riyals ($ 40 billion) into the local economy each. year until 2025. (Report by Saeed Azhar; Editing by Kevin Liffey and Tomasz Janowski)