Oil production cuts hit Saudi Arabia’s economy hard again, but the non-oil sector on which the kingdom is pinning its hopes for job growth is showing signs of improvement.. Saudi Arabia’s economy contracted for a fifth straight quarter as the kingdom curtailed crude production to fulfill its commitments to OPEC, though the non-oil sector – the engine of job creation – showed signs of improvement.
Gross domestic product shrunk 4.6% in the third quarter compared to the same period of last year, according to the statistics authority. In line with most other nations, that was an improvement from a 7% contraction between April and June as the worst effects of the coronavirus pandemic wore off.
The oil economy fell 8.2% – the biggest drop since at least the start of 2011, when Bloomberg began compiling such data – as OPEC curbed output to prop up prices. Brent crude has risen to about $51 a barrel since the cuts started, but the global benchmark is still down 22% this year. The non-oil sector lost less steam. It declined by 2.1%, compared to 8.2% in the second quarter, as the government eased virus restrictions and businesses gradually reopened. The overall figure was slightly worse than an estimated contraction of 4.2% released by the statistics body last month, which didn’t include a breakdown by sector.
The world’s largest oil exporter is facing a dual crisis this year as the pandemic and lower energy prices strain its finances and the private sector.The kingdom pumped an average of 8.8 million barrels a day between July and September, down from 9.3 million in the previous quarter and 9.4 million a year earlier. While OPEC+ – an alliance between the Organization of Petroleum Exporting Countries and others such as Russia – started its cuts in May, Saudi Arabia’s second-quarter production numbers were skewed by its record output in April during a brief price war.
Source: aljazeera.com
