Saudi Arabia’s economy grew in the fourth quarter of 2018 at its fastest rate since early 2016, statistics agency data showed on Sunday.
The agency explained that this growth was due to an expansion in the oil sector while non-oil growth was sluggish.
Fourth-quarter gross domestic product (GDP) grew by 3.59 percent from a year earlier. In the third quarter, annual growth was 2.5 percent.
“The oil sector led the recovery in the final quarter, reflecting stronger production, particularly at the beginning of the quarter,” Reuters quoted Chief Economist at Abu Dhabi Commercial Bank Monica Malik as saying.
The data showed how the Kingdom’s economic recovery still heavily relies on oil output.
While the oil sector grew almost six percent year on year, and growth in the non-oil sector was 1.8 percent, down from 2.1 percent in the third quarter of 2018.
Last week, state-owned Saudi Aramco announced it had agreed to buy a majority stake in Saudi Basic Industries Corp. (SABIC) from the Saudi sovereign wealth fund, Public Investment Fund (PIF), for $69.1 billion.
The deal could boost economic growth as the sovereign fund gains more firepower to proceed with its plans to create jobs and diversify the largest Arab economy beyond oil exports.
Dubai-based Arqaam Capital said in a research note on Sunday the acquisition is expected to boost credit growth, “as corporate activity on increased award momentum continues to improve particularly toward the end of the year and potentially on loans from Aramco to fund the purchase of SABIC.”
Malik said economic growth in 2019 would be impacted by how the PIF implements investments. “Our assumption is that the SABIC sale will boost PIF’s investments in the second half of the year,” she added.
The kingdom’s GDP at constant prices amounted to SAR682.51 billion ($181.84 billion) in Q4-18, compared to SAR658.89 billion ($175.55 billion) in Q4-17, according to data released by the General Authority for Statistics (GASTAT).
The GCC nation’s oil GDP at constant prices grew 5.96 percent while the non-oil GDP rose two percent during Q4-18, the state-run statistics agency said.
The Saudi body further indicated that the private sector’s GDP increased 1.96 percent whereas the public sector’s GDP went up 2.07 percent at the end of Q4-18.
Meanwhile, the Kingdom’s GDP at current prices leveled up 10.25 percent year-on-year to SAR747.74 billion ($199.3 billion) in Q4-18, compared to SAR678.2 billion ($180.8 billion).
