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Oil drags down Saudi GDP growth

A dip in oil output dragged down Saudi Arabia's GDP growth to 2.1 per cent in the first quarter of this year, government data released yesterday showed.

A dip in oil output dragged down Saudi Arabia's GDP growth to 2.1 per cent in the first quarter of this year, government data released yesterday showed.

Growth dropped from 6.5 per cent in the year earlier period, according to figures from the Central Department of Statistics.

It revised its GDP growth figure for that period from a previously announced rate of 8.3 per cent.

Expansion in the non-oil private sector slackened to 4.3 per cent in the first quarter of this year, down from 5.2 per cent.

The data follows the release of a report on Saturday about the kingdom's economy by the IMF. It said overall growth for this year would slip to 4 per cent, from 5.1 per cent last year.

"Private sector growth is expected to be strong, but oil production is likely to be below 2012 levels while government spending growth may slow," the IMF said in a report concluding its Article IV consultation with the kingdom.

Saudi Arabia's economy benefited from a pick-up in oil output during the past two years as Opec pushed up production to compensate for disruption to supply in Libya and later Iran.

The government also pushed up social spending to appease citizens in response to unrest sweeping across the region.

But both drivers have since slowed.

The IMF said government expenditure had slowed last year.

Still, it said with oil prices and production expected to be lower this year, fiscal and external surpluses would narrow.

It forecast inflation to reach 4 per cent this year, up from 2.9 per cent last year.

Consumer price rises in the kingdom grew to 3.8 per cent in May, driven by higher food prices and housing costs, according to government data.

Inflation would ease towards the year-end in line with declining international food prices, the IMF said.

Separately, in another report, the IMF forecast GDP growth in Oman to reach 5.1 per cent this year, up from 5 per cent last year.

New recovery technologies and investment prompted by higher oil prices would help to lift oil output last year and this year, it said.

Inflation would rise from 2.9 per cent last year to 3.1 per cent this year, it forecast.

 

tarnold@thenational.ae

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