Saudi Q3 economic growth picks up as oil output rebounds

Wed Dec 4, 2013 10:04am EST

By Angus McDowall  and Martin Dokoupil
    RIYADH/DUBAI, Dec 4 (Reuters) -    Saudi Arabia's economy
expanded at an annual rate of 3.1 percent in the third quarter,
only half as fast as it grew a year ago, according to data
released on Wednesday.
    The annual inflation-adjusted growth rate slowed to 2.1
percent during the first quarter in Saudi Arabia, the world's
top oil producer. The growth rate rose to 2.7 percent in the
second quarter, according to the Central Statistics Office, and
continued to rise as output increased in the third quarter. 
    "Oil is the one pushing the headline numbers, but there is
an evident moderation in the non-oil sector," said John
Sfakianakis, chief investment strategist at Masic, a Saudi
investment company.
    The $711 billion Saudi economy, which has been pegging its
currency, the riyal, to the U.S. dollar for decades, grew 5.7
percent year-on-year in the third quarter of 2012 and 5.1
percent in all of last year.
    Quarter-on-quarter, Saudi real GDP grew 1.1 percent in
July-September 2013, reversing the same decline in the previous
quarter, according to a Reuters calculation based on the
official data.    
    Performance of the top Arab economy is closely linked to
energy prices, crude oil output and government spending, which
has been growing strongly in the past years, partly to address
social tensions stemming from unrest in the Middle East.
    Growth in the oil sector, which accounts for nearly half of
the economy, was 3.1 percent year-on-year in July-September,
after a 3.7 percent drop in the second quarter.     
    However, growth in the Saudi non-oil private sector eased to
3.3 percent in the third quarter from 4.2 percent in April-June
and 4.3 percent a year earlier.
    "The figures reflect the high level of spending in 2012.
There was also a degree of disruption caused by labour market
policies in the third quarter of this year," said Paul Gamble,
director, sovereign group at Fitch Ratings in London. 
    Around a million foreign workers have left Saudi Arabia this
year after a crackdown on visa irregularities, which accompanied
labour reforms aimed at putting more Saudi nationals into jobs
held by expatriates. Today's data showed a slowdown in some
sectors that depend on cheap imported labour, Sfakianakis said.
    Growth in transport and storage slowed to 3.2 percent from
6.8 percent a year earlier. In the wholesale, retail, hotels and
restaurants sector, growth slowed to 2.7 percent from 7.1
percent a year ago. 
    Not all sectors that rely on cheap labour slowed.
Construction grew 5.7 percent in the third quarter, well above
4.9 percent a year earlier.
    Growth in non-oil business activity quickened in November, a
purchasing managers survey showed earlier on Wednesday, but the
rate remained slower than the average.    
    Analysts polled by Reuters in September forecast economic
growth in the desert kingdom would slow to 4.2 percent in 2013
from 5.1 percent last year.
FILED UNDER:
Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.