The Kingdom of Saudi Arabia’s economy shrank by 3.8 percent during the fourth quarter of 2020, according to preliminary data released by the Saudi government. However, the economy grew by 2.8 percent quarter-on-quarter. The data also shows that the Kingdom’s economy contracted by 4.1 percent last year.
According to London-based research firm Capital Economics, the Kingdom’s gross domestic product (GDP) fell by 13 percent year-on-year during the second quarter of 2020.
Jason Tuvey, Senior Emerging Markets Economist told the media, “Overall, after recording a contraction of 1.0 percent y-o-y in Q1, we estimate that the Saudi GDP fell by 13 percent y-o-y in Q2. We expect that the recovery will remain slow as austerity weighs heavily on consumer-facing sectors, the suspension of Umrah pilgrimages continues to hit the tourism sector, and the oil sector remains a key drag on the economy.”
In December, the Kingdom announced a budget of $263.91 billion for 2021. The Kingdom will spend 7 percent less in 2021 than the estimated spending for this year. This is a result of the deficit caused by the turmoil in the oil prices as Saudi Arabia is the biggest exporter of oil in this world.
The Kingdom said in a statement that it expects to post a deficit of 298 billion riyals this year, or 12 percent of gross domestic product (GDP) as crude revenues are slated to drop by over 30 percent. and 141 billion riyals or 4.9 percent of GDP next year.