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Slump in Saudi Arabia's economy deepens - experts

Arab World Materials 31 August 2016 16:29 (UTC +04:00)
The slump in Saudi Arabia’s economy has deepened, with output falling by more than two percent year over year in June.
Slump in Saudi Arabia's economy deepens - experts

Baku, Azerbaijan, Aug. 31

By Aygun Badalova - Trend:

The slump in Saudi Arabia’s economy has deepened, with output falling by more than two percent year over year in June, analysts of the British economic research and consulting company Capital Economics say.

“A recovery is likely to get underway over the rest of this year and in 2017-18, but it is likely to be slow-going,” Jason Tuvey, Middle East Economist at the company said in a report, obtained by Trend.

With the reference to official data he noted that having expanded by 1.5 percent year over year in Q1, it appears that the Kingdom’s economy contracted by around 2.3 percent year over year as of June.

Over Q2 as a whole, Capital Economics’ analysts estimate that output fell by two percent year over year.

“If our Tracker is correct, this would be the first contraction in the Saudi economy since 2009, in the midst of the global financial crisis,” Tuvey said.

Saudi Arabia’s oil sector has slowed sharply in recent months, he noted.

“Although oil production has approached record levels again, the year-on-year change in output (which is what matters for GDP growth) has weakened, Tuvey said. "That said, the overriding weakness lies in the non-oil sector, where our Tracker suggests that output fell by around 4.5 percent year over year in June.”

He added that this would represent the steepest contraction in the non-oil sector since 1986 (when non-oil output dropped by 5.8 percent over the year as a whole).

Saudi Arabia is the largest OPEC oil producer and exporter. The Kingdom produced 10.308 million barrels per day of oil in June compared to 10.242 million barrels per day in May, according to OPEC’s latest estimates.

According to the US Energy Information Administration (EIA), in 2015 Saudi Arabia earned $130 billion in net oil export revenues (unadjusted for inflation) compared to $247 billion in 2014. In January-May 2016 Saudia Arabia earned $39 billion.

On a per capita basis, Saudi Arabia’s net oil export earnings amounted to $4.124 in 2015 compared to $7.925 in 2014.

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