Saudi Arabia’s economy grew by a weaker-than-expected 0.3% in 2019 as the oil sector contracted sharply, official data showed on Sunday, although the non-oil sector accelerated.
Saudi Arabia, the world’s biggest oil exporter, wants to boost the private sector and diversify its economy away from oil, but sliding oil prices and crude output cuts agreed with OPEC allies continue to weigh on its overall growth.
Real economic growth in the non-oil sector increased by 3.3% last year, according to data from the General Authority for Statistics, the strongest growth since 2014.
Overall GDP growth was below an official forecast of 0.9% and the oil sector shrank by 3.6%, marking the Saudi economy’s worst performance since it contracted in 2017.
Expansion of the non-oil sector was mainly driven by growth in the private sector, which amounted to 3.8%, said the statistics authority.
“Non-oil activities continued to strengthen supported by high investment activity,” said Monica Malik, chief economist at Abu Dhabi Commercial Bank.
In 2019, financial, insurance and business services, as well as retail trade and restaurants and hotels, were among the activities that saw the strongest growth - reflecting the government’s investment drive into areas such as tourism and entertainment.
The energy and manufacturing sectors shrank.
Saudi exports fell by 10.4% year on year, because of a 14% drop in oil exports, the data showed.
Saudi Arabia’s central bank governor, Ahmed al-Kholifey, said last month the non-oil sector will support overall economic growth in 2020, despite a challenging economic backdrop, further weakened 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 “umrah” pilgrims and to tourists from at least 25 countries where the new coronavirus has been found.
