JAKARTA - Saudi Arabia's economic growth was recorded at minus or contracted by 1 percent in the first quarter of 2020. Based on official data released Tuesday, June 30, it shows that this decline was due to the impact of falling oil prices and the crisis caused by the COVID-19 pandemic which began to worsen in March.
"This negative growth mainly came from a contraction in the oil sector by 4.6 percent. Meanwhile, the non-oil sector recorded a positive growth rate of 1.6 percent," said the General Authority for Statistics or BPS of Saudi Arabia, as quoted by Reuters, 30 June
The world's largest oil exporter is facing its worst economic downturn this year after the COVID-19 pandemic reduced global demand for crude oil. Worldwide protocols on curbing the spread of COVID-19 are hurting Saudi non-oil revenues.
"The crisis due to the coronavirus means that is old news. And the numbers in the second quarter are likely to be even more dire," said Capital Economics Middle East economist James Swanston.
In the first quarter, the value of Saudi Arabia's oil exports fell by around US $ 11 billion on an annual basis. In April alone, the decline was USD 12 billion.
Sharp production cuts in May and June aimed at lifting oil prices are likely to weigh on oil GDP further in the second quarter. Figures released by the Saudi Arabian Monetary Authority this week suggest that May non-oil revenues will continue to be depressed.
Not only oil, profits for the banking sector even fell by almost 40 percent in May. "Measures such as a lockdown and weak confidence continue to weigh on spending," said Dubai-based Arqaam Capital.
Arqaam estimates that consumer spending fell 32 percent on an annual basis in May. In the previous month or April, there was a decrease in consumer spending by 35 percent.
To increase non-oil revenues, the government of Saudi Arabia has ordered an increase in value added tax (VAT). But it is likely to reduce consumer spending and slow economic recovery after lockdowns are eased.
For information, the International Monetary Fund (IMF) estimates that the Saudi Arabian economy will drop 6.8 percent this year.
The English, Chinese, Japanese, Arabic, and French versions are automatically generated by the AI. So there may still be inaccuracies in translating, please always see Indonesian as our main language. (system supported by DigitalSiber.id)
