By Ed Attwood
Construction and utilities post strong growth, weak retail is 'puzzling' - Jadwa
Saudi nominal GDP maintained its robust growth in the second quarter,
increasing by 15.2 percent against the same period a year earlier, according to
the latest data from Jadwa Investment.
Inflation adjusted real GDP growth data is not yet available, but Jadwa
maintains its forecast for full-year real Saudi GDP growth at 3.9 percent.
The Riyadh-based finance house said that although nominal
growth was down in comparison to the 34.1 percent growth in the first quarter,
an increase in oil revenues had led to 24.1 percent growth in the second
Growth in the non-oil private sector dropped from 6.7
percent in the first quarter to 6.2 percent in the second.
A sustained programme of government spending led to the
construction and utilities sectors posting a strong performance in the second
quarter, rising by 8.4 percent and 7.9 percent, respectively.
Elsewhere, telecoms growth stayed healthy, boosted by the
provision of mobile and broadband applications. Telecoms is combined with
transport in the GDP data; the sector saw growth of 6.5 percent in the second
Agriculture and retail were amongst the weakest
“We had not anticipated that retail would
be one of the weakest performing sectors in the second quarter,” the report
“Given the indications of strong consumer
spending (point of sale transactions were up by 33 percent and cash withdrawals
from ATMs up by 14 percent over the same period), the slowdown in growth in the
retail sector, to 3.6 percent from 8.8 percent in the first quarter, is
Jadwa predicted that third-quarter data would show a
slowing of the non-oil private sector due to relative business inactivity during
Ramadan, saying that growth would remain at around its current levels.
However, the firm believes that non-oil private sector
growth will pick up again in the last quarter, due to increased bank lending and
stronger consumer confidence.
“With oil prices (WTI)
expected to average $78 per barrel this year (a slight increase on our previous
forecast of $75 per barrel), we expected total nominal economic growth in 2010
of 15.7 percent,” the report added.