Saudi Arabia: GDP contracts at slower pace in Q1
The economy contracted 3.3% on an annual basis in the first quarter, after shrinking 3.9% in the fourth quarter of 2020. The result marked the seventh consecutive quarter of falling output.
The softer fall in output was predominately driven by a rebound in the non-oil private sector economy, which posted a 3.3% expansion in Q1 (Q4 2020: -0.9% yoy). Furthermore, government spending increased a modest 0.3% in Q1, after falling 0.3% in the previous quarter. Meanwhile, the oil sector economy shrank 12.0% in the first quarter, which was significantly steeper than the 8.6% contraction recorded in the prior quarter.
Going forward, the non-oil private sector economy should continue to benefit from the gradual easing of Covid-19 containment measures and the resumption of international travel as the global vaccination campaign continues to gain steam. Turning to the oil sector, the easing of production curtailments from May through to July, coupled with higher prices and a low base effect, should benefit oil output for the remainder of the year—boding well for overall GDP.