The Saudi Arabian economy will remain contracted in 2017 before returning to “modest” growth of 1.3 percent in 2018, a report has claimed.
Oil production cuts as part of the OPEC agreement will see oil sector growth remain in negative territory in the second half of this year, while the private non-oil sector continues to face headwinds, amid government spending cuts to a number of infrastructure projects, according to an analysis from BMI Research.
Real GDP growth in the kingdom stood at -1 percent year on year in the first half of 2017, after having alreadty contracted by 0.5 percent in the first quarter of the year.
This contraction was largely driven by the oil sector, which accounts for over 40 percent of GDP and contracted by 2 percent in the first six months of 2017, BMI said.
Meanwhile, the non-oil sector has also struggled to regain traction, expanding by a sluggish 0.6 percent year-on-year over the same period – up from 0.2 percent throughout 2016.
Based on conservative expectations for growth, BMI said it predicts the economy to recede by 0.5 percent in 2017 before picking up to 1.3 percent in 2018.
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