Saudi Private Sector Shrinks as Covid-19 Recovery Wobbles

(Bloomberg) -- Saudi Arabia’s private-sector recovery from the impact of the coronavirus faltered in the second quarter, even as rising oil production helped boost the overall size of the economy.

The private sector accounted for 48% of economic output, compared to nearly 52% in the previous three-month period, a statement from the General Authority for Statistics showed on Monday. Business activity in Saudi Arabia’s non-oil private sector had slowed last month, according to IHS Markit’s Purchasing Managers’ Index. 

Gross domestic product grew 0.6% during the second quarter compared to the previous three-month period, lower than an earlier government projection of 1.1%, the statement showed. The non-oil economy contracted 0.5% on a quarterly basis, a downward revision from a previous estimate of 1.3%. 

On an annual basis, the kingdom’s non-oil economy grew 8.4% while the oil economy contracted about 7%. Output expanded 1.8% year-on-year, the fastest pace since late 2018, driven mainly by a boost in the oil sector. 

Read More: Saudi Arabia Second Quarter Real GDP: Summary

“The GDP data reflects the economy is in its recovery path,” said Monica Malik, chief economist at Abu Dhabi Commercial Bank. “The yearly growth highlights the rebound in activity from the depth of the Covid-19 crisis during the second quarter of 2020, with the quarterly data reflecting some normalization after the initial recovery.”

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