Saudi Economy Recovers from Recent Loss as Oil Output Rises
Official data revealed that the Saudi economy is starting to recover in the first quarter of this year. This was after its first decline after eight years during 2017. In the following months, the recovery is set to accelerate as the oil production increases.
The country’s statistics agency reported that the Gross domestic product adjusted for inflation with 1.2% rise.
In every quarter of 2017, GDP declined on the emergence of global price-supporting agreement between oil exporting countries. This made Saudi Arabia reduced its oil output. Saudi Arabia’s garnered a 0.7% fall last year.
The oil deal impacted the start of 2018 as Saudi Arabia achieved its required cuts. Comprising over 40% of the economy, the oil sector increased by 0.6% in the first quarter. This was a big contrast to its 4.3% decrease in 2017’s last quarter.
Saudi oil production is set to expand in the following months. Last month, global traders approved of boosting the oil output with a combination of 700,000 to 1 million barrels per day. Riyadh, which is the world’s oil exporter, may justify the increase in lion’s share.
In a tweet last Saturday, President Donald Trump announced Saudi Arabia’s King Salman agreement on boosting the oil production. The agreement went to 2 Million bpd in balancing production’s losses in Iran, which faces U.S. sanctions including Venezuela.
Saudi economy model of growth may return, Chief economist says
Analysts are dubious in such a big jump. However, Monica Malik, chief economist at Abu Dhabi Commercial Bank said that she was assuming conservatively. She pertains to the 500,000 bpd rise in oil output of Saudi Arabia in the second half of 2018. This acceleration would include an about 5% increase every year.
The global supply interruptions could contribute to Riyadh’s plan to lift its output even more. Oil sector led the overall GDP of 2.1% this year according to Malik.
“To some degree, we’re likely to return to Saudi Arabia’s old model of growth this year, with rising oil exports feeding through into the rest of the economy. Structural reforms to create other sources of growth may have an impact in coming years, but don’t look like they’ll be in time to have an effect this year,” she said.
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