Saudi economy contracted 3.9% in fourth quarter as oil drags

Saudi Arabia’s economy contracted 3.9 per cent in the fourth quarter of 2020 from the same period a year earlier, dragged down by the biggest slump in the oil sector in at least 10 years.

Still, the overall data marked an improvement from the previous quarter, when the economy shrank an annual 4.6 per cent, as Covid-19 cases eased and the kingdom gradually returned to business as usual, according to a release from the government’s General Authority for Statistics. The economy contracted 4.1 per cent last year, in line with February’s preliminary estimates.

The non-oil economy, the engine of job creation, shrank an annual 0.8 per cent in the fourth quarter, with the headline figure pushed down by an 8.5 per cent contraction in the oil sector – which makes up the bulk of the economy of the world’s largest crude exporter.

That’s the biggest drop since Bloomberg began compiling quarterly data in 2011, and largely due to production cuts by OPEC and its allies from May as Saudi Arabia and other cartel members sought to bolster prices.

Saudi oil revenue rose in December to the highest since February, the start of the pandemic-induced oil crash.