Saudi economy will grow as oil output increases: CE

Saudi Arabia’s economy will grow over the coming quarters, supported by fiscal stimulus and a jump in oil output, Capital Economics said in a new report.

“Looking ahead, the Saudi economic recovery will gather pace over the coming quarters. Fiscal stimulus should support a further pick-up in growth in the non-oil economy,” it noted.

The revised OPEC agreement is likely to result in a sharp jump in Saudi oil output in the coming months which will directly boost year-on-year (YoY) GDP growth by around 2. percentage points, the consultancy reiterated.

On Sunday, the General Authority for Statistics said real GDP rose 1.2 per cent year-on-year (YoY) to SAR 647.8 billion during the first three months of 2018 compared with a contraction of 1.2 percent YoY in Q4, 2017 and a decline in GDP of 0.7 percent over 2017.

The oil sector expanded by 0.6 percent YoY in Q1 after having contracted by 4.3 percent in Q4 2017. The non-oil sector expanded by 1.6 percent YoY in Q1 – its second-fastest pace in nine quarters - supported by stronger growth in the non-oil private sector, particularly manufacturing.