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Oil sector presses on Saudi economy in 2019

2 Mar 2020 12:33 PM

Official data showed yesterday that the Saudi economy grew weaker than expected by 0.3% in 2019 as the oil sector contracted sharply, despite the acceleration of the non-oil sector.

Saudi Arabia, the world's largest oil exporter, wants to strengthen the private sector and diversify its economy away from oil, but falling oil prices and reduced crude oil production agreed with OPEC allies continue to weigh on its overall growth.

Real economic growth in the non-oil sector rose by 3.3% last year, according to data from the General Statistics Authority, the strongest since 2014.

GDP growth was below official expectations of 0.9% and the oil sector contracted by 3.6%, marking the worst performance for the Saudi economy since its contraction in 2017. The expansion in the non-oil sector was mainly driven by growth in the private sector of 3.8%, according to the Statistics Authority.

The data showed that Saudi exports decreased by 10.4% over the year, due to a 14% drop in oil exports. Saudi Central Bank Governor Ahmed al-Khelaifi said last month that the non-oil sector would support overall economic growth in 2020, despite a difficult economic backdrop, compounded by the global spread of the coronavirus.

Last week, Saudi Arabia, which has not reported any cases of the new virus, closed its borders to foreign pilgrims and tourists from at least 25 countries where the Coronavirus was found.

Hajj is an important source of income for the kingdom, which has the holiest sites of Islam in Mecca and Medina and is the backbone of plans to expand visitor numbers as part of Crown Prince Mohammed bin Salman's ambitious economic reform agenda.

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