Country Economic Forecasts > Saudi Arabia

GDP in Q2 grew at just 1.4% y/y, its slowest pace since Q1 2013, continuing a slowdown seen since mid-2015 resulting from the twin impact of low oil prices and fiscal austerity policies. But this understates the gloom, as non-oil GDP rose just 0.4% y/y and is actually down by 0.1% y/y in H1. Secondary indicators also generally point to stagnation in the non-oil economy and with continued evidence of payment delays, job cuts and tighter liquidity the central bank was recently forced to inject $5.3bn into the banking sector we now see non-oil GDP declining 0.2% this year.As we had expected, little meaningful agreement was reached at OPECs informal meeting in Algiers, with the allocation of a proposed production cut put back to November and doubts about implementation given a lack of trust between Saudi and Iran. We see the Kingdoms hydrocarbon GDP up 2.8% in 2016, leaving overall GDP growth at just 1.1%, the weakest in the GCC.