Saudi Arabia's Gross Domestic Product (GDP) contracted by one percent in the first quarter compared to 1.7 percent in the same quarter last year, according to preliminary estimates from the General Authority of Statistics.
"This negative growth originated mainly from the contraction in the oil sector by 4.6%, while the non-oil sector recorded a positive growth rate of 1.6%," the General Authority for Statistics said.
Saudi Arabia is facing a huge economic setback as the COVID-19 pandemic reduced demand for crude and the lockdown measures to contain the virus affected the kingdom's non-oil economy.
In the first quarter of 2020, wholesale & retail trade, restaurants and hotels recorded the largest growth rate (4.8 percent), followed by other mining and quarrying with 4.6 percent, and transport, storage, and communication with 4.1 percent.
On the other hand, of the activities that recorded a negative growth rate, petroleum refining contracted the most, by 24.2 percent, followed by crude petroleum & natural gas with 2.9 percent.
"The coronavirus crisis means that this is somewhat old news and the figures for Q2 will almost certainly be terrible. After rising in April, oil production has been cut sharply over the past couple of months in a bid to prop up oil prices," James Swanston, MENA economist at Capital Economics said in a note
"And the figures from the non-oil sector are ominous. ATM withdrawals and point of sale transactions, for instance, dropped by close to 35 percent year-on-year in April. The lockdown was only lifted towards the end of June," he added.
According to The International Monetary Fund, Saudi Arabia's GDP will shrink by 6.8 percent this year due to low crude prices and as the coronavirus batters Middle East economies.
"A recovery is likely over the rest of the year, but this will be held back by the imposition of fiscal austerity, including a tripling of the VAT rate from 5% to 15% that takes effect in July," Swanston said.
(Reporting by Seban Scaria; Editing by Mily Chakrabarty)
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