Saudi Q2 Annual Growth Picks Up, Non-Oil Expansion Is Firm

Saudi Arabia’s annual economic growth rose to 2.7 per cent in the second quarter after a weaker six months as non-oil expansion remained robust while a decline in the oil sector eased, government data showed on Tuesday.

The world’s top oil exporter had seen its gross domestic product growth rates decelerate sharply in the previous two quarters to as low as 2.1 per cent in January-March, the weakest level since at least 2010, as crude sector output dropped.

However, the OPEC member’s real GDP rose 5.5 per cent in April-June 2012 and 5.2 percent in the whole of last year.

And in a quarter-on-quarter comparison, Saudi GDP fell 1.1 per cent in April-June 2013, the first such decline in a year, according to a Reuters calculation based on the official data. It grew 2.7 per cent quarter-on-quarter in January-March.

The desert kingdom, which pegs its riyal to the U.S. dollar, saw its quarterly economic performance fall in every second quarter since the quarterly data series started in 2010.

Growth in the biggest Arab economy is closely linked to energy prices and crude oil output, as well as to government spending which has been rising sharply over the past decade.

Output of the oil sector, which accounts for nearly half of the $711 billion economy, fell 3.7 per cent year-on-year in the second quarter, less than a 6.3 per cent drop in January-March, the data from the Central Department of Statistics showed. It jumped 9.6 per cent in April-June 2012.

Saudi oil exports averaged 9.3 million barrels per day (bpd) in the first half of 2013, down from 9.9 million bpd in the first six months of last year, according to government figures.

Growth in the non-oil private sector edged down slightly to 4.2 per cent in April-June compared with a 4.3 per cent expansion in the first three months of 2013.

Analysts polled by Reuters in April forecast Saudi economic growth to slow to 4.1 per cent in 2013 and 4.0 per cent in 2014.