DUBAI
The Saudi economy pulled out of recession in the first quarter of 2018 thanks to oil price rises, a think tank said Tuesday.
Capital Economics said the Saudi economy grew by 1.5 per cent in the first quarter, after having contracted by 0.7 per cent in 2017.
“The oil sector was the main driver of the recovery,” the London-based group said.
Oil prices surged to around $80 a barrel last month from under $30 a barrel in early 2016 after Opec and non-Opec producers struck a deal to cut output.
As a result of the crash in prices, the economy dipped into negative territory last year for the first time since 2009, a year after the global financial crisis.
The Opec leader has posted a budget deficit in the past four years, and it has borrowed from domestic and international markets and hiked fuel and power prices to finance the shortfall.
It also introduced a five-percent value-added tax from the start of 2018.
The world’s top crude exporter has seen a key boost in its revenues after the recovery in oil prices. Last month, Saudi Arabia and Russia announced that they were looking at relaxing the crude oil output quotas that has helped prices recover from multi-year lows.
Riyadh-based Jadwa Investment said on Monday that Saudi fiscal reserves rose by $13.2 billion in April, marking its largest monthly increase since October 2013.
The reserves stood at $506.6 billion in April, down from $732 billion at the end of 2014.
Since 2014, Saudi budget deficits have totalled $260 billion and the government is projecting a 2018 shortfall of $52 billion.
