DUBAI: Saudi Arabia’s economic growth eased to an annual rate of 4.7 percent in the first three months of 2014 as labour market measures curbed activity in some sectors, but the expansion was still stronger and more widespread than growth a year ago, data showed yesterday.
Economic growth in the world’s top oil exporter reached 5.0 percent in October-December, the fastest pace since the third quarter of 2012. “It is certainly the change in the labour market affecting the annual growth,” said Fahad Al Turki, head of research at Jadwa Investment in Riyadh. “(But) the quality of growth is improving. It’s spread over more sectors than the top three.”
On a quarterly basis, inflation-adjusted gross domestic product growth accelerated to 3.4 percent, the fastest clip in a year, from 2.7 percent in the previous quarter, the Central Statistics Office data show.
Economic growth is usually at its most robust early in the year, when the weather is at its most favourable and few public holidays halt work. Overall, the non-oil private sector growth slowed to 4.4 percent year-on-year from 6.2 percent in the previous quarter, the slowest pace in at least a decade, analysts said.
Around a million foreign workers left Saudi Arabia last year after a crackdown on visa irregularities. Another reason for the slowdown may be that households balance sheets are stretched after a surge in consumer borrowing over the past few years, said William Jackson, emerging markets economist at Capital Economics in London.
In the first quarter, growth in all three sectors that relied on cheap foreign labour — construction, retail and transport — slowed markedly from a year ago.
For example, construction output growth shrank to 5.6 percent in January-March, the slowest pace since end-2012 and down from 9.9 percent in the final three months of 2013. Manufacturing, however, grew 6.5 percent, the fastest pace in two years and up grom 4.0 percent in October-December, as new investment projects come on stream.
In a separate survey, the Saudi purchasing managers index (PMI) rose to a five-month high in June, suggesting that activity in the non-oil sector have stabilised in the second quarter. A Reuters poll in April forecast the Saudi economic growth would ease to 3.8 percent in 2014 from 4.0 percent last year and then accelerate to 4.3 percent in 2015.Reuters
