Saudi Arabia GDP

Saudi Arabia

Saudi Arabia: The economy weathers falling oil prices well in Q2

August 31, 2015

GDP expanded 3.8% in Q2 over the same quarter last year, which represented an acceleration over the 2.3% increase tallied in Q1 (previously reported: +2.4% year-on-year). The print overshot the 3.0% increase that FocusEconomics panelists had expected and marked the fastest growth in five quarters. The acceleration observed in Q2 mainly reflected a healthy expansion in the oil-related sector (Q1: +1.8% yoy; Q2: +5.1% yoy), while non-oil industries recorded a mild improvement (Q1: +3.0% yoy; Q2: +3.1% yoy).

Growth in the agriculture sector slowed to 1.0% in Q2 (Q1: +1.2% yoy), while dynamics in the manufacturing sector accelerated to a 4.0% expansion (Q1: +3.3% yoy). Activity in mining and quarrying, which include the all-important crude and oil sectors, rose 4.8% in Q2, marking a strong acceleration over the 1.6% increase in Q1. Despite falling oil prices, the economy is benefiting from the strong crude supply, which is reaching historically high levels. In the services sector, growth in financial services picked up in Q2, while dynamics in domestic trade and the construction sector decelerated.

The Saudi Arabian Monetary Authority (SAMA) expects the economy to increase 2.8% in 2015. FocusEconomics panelists project the economy to grow 2.6% in 2015, which is up 0.1 percentage points from last month’s estimate. For 2016, panelists expect the economy to also grow 2.6%.

Author: Ricard Torné, Lead Economist

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Saudi Arabia GDP Chart

SaudiArabia GDP Q215

Note: Year-on-year changes of GDP in %.
Source: Central Department of Statistics & Information (CDSI) and FocusEconomics Consensus Forecast.

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