After the price of crude rose and the government spent massive amounts, the economy of Saudi Arabia saw almost 3.8% real growth in 2010, based on information given by a kingdom investment firm. Jadwa Investments out of Riyadh, released official numbers showing that the nominal economy was boosted by about 16.6 percent after a contraction of over 20 percent was seen in 2009.
Nominally the economy grew by 16.6 percent while real term growth sits around 3.8 percent.
Saudi’s Revised 2009 GDP Rate Drops From 0.6% to 0.2%
Revisions to the 2009 data were significant, placing the growth at only 0.2 percent as opposed to 0.6 percent, according to Jadwa, which is within the lowest rates of growth seen in the oil rich nation over the past decade.
The report noted that revisions are normal and more are likely to come. Fresh data from the government in regards to 2010 serve to restate the numbers seen in the budget. The oil sector growth is at 2.1 percent, growth in the non-hydrocarbon private sector is at 3.7 percent and growth in the non-hydrocarbon government sector is at 5.9 percent.
The 2009 revisions are more interesting than last year’s data. These numbers are at the same levels as those seen in preliminary data issued alongside the budget for 2010, although they are lower than the revisions made midway through last year that quoted 0.6 percent.
Also, growth in the oil sector for 2009 dropped further to hit -7.6 percent from the earlier figures that estimated -7.1 percent growth.
Jadwa noted that the new numbers are closer to the drop in oil production (12 percent) and added that output numbers are larger than production numbers since gas output and other projects are included within the sector.
Growth in the non-oil private industry dropped from 3.5 percent down to 2.7 percent. These figures mean that improvements seen for 2010 are even better, although it also indicates that the private sector had a challenging and difficult time in 2009 even with the levels of government spending.
Real growth sat at 2.7 percent for 2009, which was the lowest level seen in the non-hydrocarbon private sector for the last fifteen years. The 3.7 percent seen last year is the second lowest since 1995.
Details of the revisions show that agriculture had the worst performance, followed by construction and manufacturing.
Construction sector growth plummeted from 4.7 percent to only 0.6 percent. The report stated that this figure is not consistent with the amount of work completed in the area and the boost in cement sales for the year. The SAMA (Saudi Arabian Monetary Authority) stated that sales of cement grew 11 percent while the cement businesses stated a figure of 23 percent growth.
In manufacturing the growth rate fell from 2.2 percent to only 1.5 percent after revisions were made to the sub-sector covering petroleum refinement.
The report stated that insurance, finance, business services and real estate sectors also experienced falls. Separations in this sector include ownership of dwellings, including about 52 percent of the overall numbers, and everything else is known as “other.”
The “other” portion is where the decreases occurred, meaning that it may be too difficult to measure the output figures taken from them.
The only numbers that saw upward revisions for 2009 were in regards to the government. Services within the non-oil government sectors grew from 4.4 percent to almost 5.2 percent, while overall government services increased from 3.8 percent to about 5.0 percent.
Increases in these areas are a source of encouragement since the level of investments in these sectors are high and the early growth rates were no better than the public sector, an implication that there is no more productivity in this sector. The average growth rate between 2009 and 2010 inclusively was at the highest levels seen since the time period between 1984 and 1985 inclusively.
Jadwa puts the Kingdom’s nominal GDP at SR 1,630 billion for 2010. It is still the biggest economy in the Arab world and accounts for over one fifth of the cumulative GDP of all 21 Arab countries.
Nominal GDP is also expected to increase by about SR 107 billion, hitting SR 1,737 billion this year on the way to a peak of almost SR 1,864 billion in 2012. Expectations in the report show GDP increasing by about 4.2 cent for 2011 and then 4.5 percent for 2012.Paul Holdsworth, Staff Writer, Gulf Jobs Market News