Saudi growth plateaued in Q2, but pick-up underway: CE

Saudi Arabia's gross domestic growth (GDP) growth will strengthen remarkably in the second half of 2018, supported by rising oil output, after hitting a plateau in the second quarter, Capital Economics said in a new report.

"The Saudi economy pulled out of recession at the start of 2018 as the drag from last year’s oil output cuts faded. But it appears that the economy failed to gather momentum in the first two months of Q2," it noted.

The consultancy's GDP Tracker found growth in both the oil and non-oil sectors were "broadly steady" compared with Q1.

However, the report said that oil output was rising even before revisions to the OPEC deal were agreed at the end of last month, jumping by 400,000 barrels per day (bpd) between May and June. In year-on-year terms, production rose by 3.8 percent last month compared with an average of 0.5 percent in the first five months of 2018.

Meanwhile, the PMI – which covers the entire non-oil private sector – rose to a six-month high of 55.0 in June, though point of sale transactions and ATM withdrawals implied that the boost to consumer-facing sectors from a raft of public sector bonuses has run its course.

Looking ahead, Capital Economy forecasts GDP growth of 3.5 percent this year and 3 percent in 2019, higher than consensus' estimates.