Saudi Arabia: GDP contracts at slower pace in Q4
The economy contracted 3.9% on an annual basis in the fourth quarter, after declining 4.6% in the third quarter. The result marked the sixth consecutive quarter of falling output.
The softer fall in output was predominately driven by a weaker contraction in the non-oil sector economy, which posted a 0.8% decline in Q4 (Q3: -2.1% yoy). Meanwhile, the oil sector economy fell 8.5% in the fourth quarter, which was slightly stronger than the 8.2% drop recorded in the quarter prior.
Commenting on the outlook, analysts at EIU noted:
“The performance of the oil sector will remain weak in the first quarter of 2021, reflecting a sharp unilateral cut in oil production in February/March. However, this will be followed by a strengthening in oil GDP over the remainder of the year, as output restrictions are gradually tapered against a backdrop of higher global oil prices. Meanwhile, the non-oil economy will benefit from a significant rebound in international—and in particular Chinese—demand. The biggest threat to the economic recovery at the moment is a renewed rise in Covid-19 infections.”