Saudi plan to wean off oil sees success even as economy stalls

Saudi Arabia’s economy shrank 0.5 per cent in the third quarter, a contraction that was broadly expected even as the kingdom’s goal of weaning itself off crude began to pay off with solid growth in non-oil sectors.

The overall economy was weighed down by shrinkage of 6.4 per cent in the country’s oil sector, according to data released Tuesday by the General Authority for Statistics. Overall growth for 2019 is expected to accelerate to a modest 0.4 per cent, according to the latest government estimates, before climbing to 2.3 per cent in 2020.

Non-oil sectors of the economy grew 4.3 per cent in the third quarter compared to about 2 per cent for the same period of 2018, a sign of Crown Prince’s Mohammed bin Salman’s initiative to diversify the world’s top oil exporter’s economy from crude.

Earlier this year, Finance Minister Mohammed Al-Jadaan said the government plans to gradually reduce spending as private-sector growth picks up and businesses take the lead.