Saudi Arabia, the largest country in the Middle East, and the second-largest country in the Arab world, saw gross domestic product (GDP) decline by 3 percent in the first quarter of 2021 compared to a year earlier.
Official data released on Monday 14th June from the General Authority for Statistics showed that despite the non-oil sector recording a positive growth rate of 2.9 percent, up from 1.6% growth recorded a year earlier, the Saudi Arabian economy shrank by 3% due to the 11.7 percent contraction in the oil sector. Meanwhile, the private sector in Saudi Arabia expanded by 4.4 percent as de facto ruler Crown Prince Mohammed bin Salman continues his transformation plan to wean the Saudi economy off oil.
The oil sector decline of 11. 7 per cent was a much sharper decline than the 4.6% contraction a year earlier and higher than the 8.5% decline in the last quarter of last year. A weak oil output hit all Oil-producing Gulf States economies even before the pandemic’s arrival a year ago as reduced hydrocarbon revenues made it more difficult for governments to balance their budgets and finance large infrastructure projects.
Saudi International Trade Strength
Despite the weak GDP data and the contraction of the economy, international trade for Saudi Arabia remained in a strong recovery in the first quarter. Imports of goods and services grew by 9.1 percent, a solid jump from the 11.3 percent growth in the final quarter of 2020. Exports also increased. First quarter exports grew by 1.9 percent compared to the 3.6 percent growth recorded in the previous quarter.
Meanwhile, private final consumption expenditure in Q1 increased 6.6 percent compared to the 1.5 percent increase posted in the previous quarter.
The (IMF) International Monetary Fund expects the Saudi economy to grow 2.1% this year, even with the sharp contraction and concerns over the commodities (oil and gas) sector.
