Saudi Arabia’s economy grows 1.1% in Q2, boosted by non-oil activities

DUBAI (Reuters) – Saudi Arabia’s gross domestic product (GDP) grew 1.1% in the second quarter, according to government estimates released on Monday, supported by an increase in non-oil activities, although overall growth decelerated sharply from the prior-year period.

The Saudi economy grew 8.7% last year, among the fastest in the G-20, as high oil prices boosted revenue and led to the kingdom’s first budget surplus in almost 10 years.

But most growth forecasts for this year have been revised downwards on lower oil prices and the probability of prolonged oil production cuts.

Oil activities declined by 4.2% in the second quarter, year-on-year, weighing on overall growth, although non-oil activities expanded 5.5%, data from the General Authority for Statistics showed.

Real GDP growth in the second quarter of last year stood at 11.2%, buoyed by an increase in oil activities of almost 23%.

The International Monetary Fund (IMF) last week cut its 2023 GDP growth projection for the world’s top oil exporter to 1.9% to reflect the impact of prolonged oil production cuts.

Saudi Arabia is expected to extend a voluntary oil output cut of 1 million barrels per day for another month to include September to provide additional support to the oil market; on Monday, oil prices were on track to post the biggest monthly gainin more than a year.

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