Saudi Arabia Economic Outlook
October 6, 2020In the second quarter, the economy contracted at the steepest pace since current records began in 2011, marking the fourth consecutive quarterly decline in GDP. The sharp drop in oil production in May–June, coupled with lockdown measures to contain the spread of Covid-19, was behind the unprecedented blow to economic activity. Domestic demand collapsed in the quarter as living allowances were suspended and non-essential businesses were closed. Turning to Q3, the economy should have recovered somewhat as oil output picked up in July–August from June’s near two-decade low. Moreover, the non-oil private sector likely gained steam as lockdown restrictions were eased, as seen through improvements in the PMI in July–August relative to Q2. That said, a sharp increase in the VAT rate in July and a record-high unemployment rate will have weighed on momentum somewhat.
Saudi Arabia Economic GrowthEconomic output is projected to contract notably this year, chiefly due to curtailed oil production. Non-oil private sector activity will likely also decline as the VAT hike and a weaker labor market depress private consumption, and a more restrictive budget hinders the economy. Next year, the economy should rebound as the impact of the pandemic fades. FocusEconomics panelists see GDP contracting 5.2% in 2020. In 2021, the panel sees economic growth at 3.7%, which is down 0.1 percentage points from last month’s projection.
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Saudi Arabia Facts
|Bond Yield||2.49||0.0 %||Jun 23|
|Exchange Rate||3.75||0.0 %||Dec 31|
|Stock Market||0.2||1.00 %||Jan 07|
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Saudi Arabia Economic News
September 30, 2020
The economy contracted 7.0% on an annual basis in the second quarter, after dipping 1.0% in the first quarter.
July 5, 2020
The Purchasing Managers’ Index (PMI), produced by IHS Markit, decreased to 47.7 in June from 48.1 in May.
July 3, 2020
Oil prices recovered noticeably over the past month, hitting a roughly four-month high, as production cuts in May–June curtailed supply and easing lockdown measures in most parts of the world supported demand prospects.
June 30, 2020
The economy contracted for the third consecutive quarter in Q1 and at the sharpest pace since December 2017 as a significant slowdown in the non-oil sector and ongoing oil production cuts weighed on activity.
June 5, 2020
Oil prices recovered noticeably over the past month hitting a near three-month high, as previously agreed production cuts in mid-April and easing lockdown measures in most parts of the world supported oil demand prospects.