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Oil Cuts Add to Saudi Pain as GDP Contracts for Second Quarter

AmirPatriot

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Dec 13, 2015
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I say "enters recession" because recession is classified as an economy contracting for 2 or more consecutive quarters. By the way, this news genuinely surprised me. 1.53% is quite steep for just 2 quarters, and there isn't any global financial crisis.

Oil Cuts Add to Saudi Pain as GDP Contracts for Second Quarter

  • Kingdom’s GDP falls 1.03% after shrinking 0.5% in 1st quarter
  • Non-oil sector grows as government seeks to transform economy
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Riyadh, Saudi Arabia

Photographer: Waseem Obaidi/Bloomberg
Saudi Arabia’s economy contracted for two quarters in a row for the first time since the global financial crisis, as the kingdom grapples with low oil prices and its businesses struggle to cope with economic reforms.


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Mohammed bin Salman

Photographer: Simon Dawson/Bloomberg
The kingdom’s gross domestic product shrank 1 percent in the second quarter from the same period a year earlier, when it expanded 0.9 percent, according to official data released on Saturday. The economy had contracted 0.5 percent in the first three months of 2017.


Crown Prince Mohammed Bin Salman is leading the push to transform the biggest Arab economy at a time when crude prices are at about half their 2014 peak. But as authorities seek to reduce the kingdom’s reliance on oil, they’re also leading efforts among OPEC members and some other major producers to bolster prices by cutting output. The kingdom’s oil GDP shrank 1.8 percent in the second quarter, weighing on overall activity.


The data also showed how non-oil industries are still struggling with efforts to overhaul the economy and shore up public finances. The non-oil GDP, the main engine of job creation, expanded below 1 percent, driven mainly by the government sector, the data show.


“There is very little capital spending going on in Saudi Arabia at the moment,” Mohamad Al Hajj, an equities strategist at the research arm of EFG-Hermes in Dubai, told Bloomberg TV in an interview.

The Saudi economy hasn’t contracted for two quarters in a row since at least 2010, official data show. The kingdom doesn’t publish quarterly seasonally-adjusted data, which is used by some economists to define a recession.

Read More: King Scales Back Austerity Plan That Set Saudis Grumbling

Figures released by the government’s statistics agency also show:

  • Within non-oil GDP, private sector activity grew 0.4 percent after expanding 0.9 percent in the previous three months
  • The government sector expanded almost 1 percent
  • The construction industry shrank 1.6 percent after contracting 3 percent in the first quarter
  • Petroleum refining expanded 5.8 percent
The kingdom’s Tadawul All Share Index retreated the most in the Middle East, falling 0.9 percent at 12:21 p.m. in Riyadh.

“What we’re seeing is stagnation in non-oil activity,” said Monica Malik, chief economist at Abu Dhabi Commercial Bank. “Second-quarter data show still very lackluster demand” even after the government reversed a decision to cut or freeze bonuses and allowances for state employees, she said.

A Bloomberg survey conducted before Saturday’s release show economists expect growth to grind to a halt this year, compared with a growth forecast of 0.5 percent in the previous poll.

https://www.bloomberg.com/news/arti...ks-for-second-quarter-in-a-row-amid-opec-cuts
 
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I don't think this will have any impact on the daily life of the average Saudi citizen. But, of course, it's bad news, however, if Saudis are serious about reforming the country, one can consider this as a temporary birth pain of a new Saudi Arabia. Time will tell. :)
 
@The Eagle

Changing the original thread title is not allowed, I believe.

This is inaccurate information. KSA's economy is expected to grow overall this year (as per the IMF) and what is more important the non-oil sector is growing too. This is a very good achievement considering the huge and groundbreaking economic reforms (ongoing overhaul) of late that will benefit KSA hugely on the long run as per all data available and reports. Not to mention the ongoing Yemen war.

The drop in total GDP is on account of the cuts, and not the drop in oil prices. Real GDP is a measure of volume, while holding prices fixed, we cut production, we are clearly going to have a drop in GDP, when the oil sector accounts for the lion's share (for now at least although the percentage is dropping, thankfully).
 
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Changing the original thread title is not allowed, I believe.

I did not. The thread title is simply different to that of the article.

And yes, it is allowed, because I can change it within a certain time after it is posted. If it was not allowed, this would not be possible.

This is inaccurate information

No it isn't. The IMF saying the KSA GDP would grow were forecasts - predictions. They got their forecasts wrong. Even if they hadn't and KSA is somehow going to pull out of and make up for the recession (Which has got worse) within the next 6 months, that still does not make this data, and it's conclusions, wrong.

Real GDP is a measure of volume,

No it isn't. Real GDP is a measure of the total value of economic output, adjusted for inflation.

while holding prices fixed, we cut production
That does not make economic sense. Supply has an inverse relation with price.
 
The thread title is correct.

Saudi Arabia back in recession
Reuters Updated October 01, 2017

DUBAI: Saudi Arabia’s economy has slipped back into recession as the oil sector stagnates and the government sector is hit by austerity policies designed to curb a state budget deficit caused by low oil prices, official data showed on Saturday. (...)
 
I did not. The thread title is simply different to that of the article.

And yes, it is allowed, because I can change it within a certain time after it is posted. If it was not allowed, this would not be possible.



No it isn't. The IMF saying the KSA GDP would grow were forecasts - predictions. They got their forecasts wrong. Even if they hadn't and KSA is somehow going to pull out of and make up for the recession (Which has got worse) within the next 6 months, that still does not make this data, and it's conclusions, wrong.



No it isn't. Real GDP is a measure of the total value of economic output, adjusted for inflation.

You did. The article that you have posted has another thread title. Thus you have changed the original thread title which is not allowed according to the rules of PDF.

IMF can say a lot of things. What is important is the official data that KSA publishes or is going to publish at the end of the year. The important thing is the growth of the non-oil sector amidst the unprecedented, necessary and highly useful and praised economic reforms.

From July 2017:

http://www.wam.org.ae/en/print/1395302624126

My point remains the same.

The temporary drop of the GDP (so far) is due to the lower oil prices (hence the budget deficit) and the cut in production and the subsequent economic reforms and overhaul. Obviously this will be felt on the short run but on the long run those reforms will boost KSA's economy a lot, in particular the growing non-oil sector which is the point of the Vision 2030. To make KSA independent of oil/gas income.

Anyway it does not matter. KSA will remain an G-20 major economy member state for a long time to come if not permanently.

You should rather worry about your country reaching the economic level of 10 million big UAE instead of "worrying" about KSA.
 
Temporary as KSA transitions from an oil-centric economy into a diversified one. iranis are salty cuz their economy can't transition.
 
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High oil creates high and cheap liquidity for Saudi economy which tends to destroy local inflation but it is compensated by multi fold increase into infrastructure development. Now contractors are going bankrupt and industries are coming back online.
 
I did not. The thread title is simply different to that of the article.

And yes, it is allowed, because I can change it within a certain time after it is posted. If it was not allowed, this would not be possible.

Said option is not for the articles that copied from another Source or Link however, if it is your own observations, analysis or write-up, then you have the option to change or choose the better one.

Also, giving the title of your choice contrary to the words of source actually results in duplicate threads based upon similar subject, hence, not allowed.

Regards,
 
Also, giving the title of your choice contrary to the words of source
It is not "contrary to the words of the source". If GDP contracts for 2 consecutive quarters, that is recession. So "contracts for second quarter" = Equals recession. And if you had a look at the first paragraph of my post, before the article, you will see I did give some input.

Point out to me where in this thread it says I cannot name the thread title in a different wording (but same meaning) of the article in my psot https://defence.pk/pdf/threads/forum-rules-and-regulations.92653/

So, just so everybody is on the same page as me, "Oil Cuts Add to Saudi Pain as GDP Contracts for Second Quarter", is the same as "Saudi Arabian Economy Enters Recession".

IMF can say a lot of things. What is important is the official data that KSA publishes or is going to publish at the end of the year.

I did not say that Saudi has had recession for the whole of 2017. I said Saudi has entered recession. It has suffered 2 consecutive periods of negative growth. That is a recession. Nothing more, nothing less. If it grows its economy by 1% next quarter, it will still have had a recession, though if it grows it will have recovered from it. If its economy contracts for another quarter, it will mean it is still in recession.

Now talk with facts and logic, not changing the subject to unrelated forecasts.

Anyway it does not matter. KSA will remain an G-20 major economy member state for a long time to come if not permanently.

Anyway it does not matter. Saudi Arabia is still in recession.

Also, you do realise the G-20 doesn't actually represent the top 20 major economies? Iran's GDP for example is higher than a few of those members in both PPP and Nominal terms.

You should rather worry about your country reaching the economic level of 10 million big UAE instead of "worrying" about KSA.

I never worry about Saudi Arabia, quite the opposite. So spare me your chest thumping bullshit. Iran's economy grew at a rate of 6.4% last year, while Saudi's is now in recession. Reply knowing that Saudi Arabia is in a recession, and saying that it is a member of some useless organisation, or that the IMF said something last year, doesn't change the fact that it is in recession.
 
It is not "contrary to the words of the source". If GDP contracts for 2 consecutive quarters, that is recession. So "contracts for second quarter" = Equals recession. And if you had a look at the first paragraph of my post, before the article, you will see I did give some input.

Point out to me where in this thread it says I cannot name the thread title contrary to the title of an article in my post https://defence.pk/pdf/threads/forum-rules-and-regulations.92653/

So, just so everybody is on the same page as me, "Oil Cuts Add to Saudi Pain as GDP Contracts for Second Quarter", is the same as "Saudi Arabian Economy Enters Recession".

Oil cuts add and resulting in recession etc, is an argument yet title of thread remains as same what source quoted at first.

You gave your input on the source originally from external link, therefore, the title remain same as to avoid duplication otherwise, everyone would be coming with own couple of lines input and new name on the same subject. If such cuts etc will result in recession or anything else, need to be proven from discussion/debate upon the subject.
 
@The SC have a little read, maybe you'll learn something.

Though I doubt it.
You should have a lot of reads, to see how Saudi Arabia is dealing with it successfully..Data is different from place to place but Saudi sources recognised the deficit and said it was dealt with successfully backed with own data.. But anything coming from KSA sources is painful for you to accept..while you own sources for 6% growth in the Iranian economy is doubted by your own compatriots.. I have nothing against that.. it is better if it was 10%.. but I don't appreciate you comparing all the time with KSA.. that is a sign of weakness.. but I doubt you can understand this statement..
 
Read the OP properly, I didn't assess how KSA is dealing with their recession. Only that a recession occurred.



View attachment 430235

Independent figures from the World Bank.

http://www.worldbank.org/en/country/iran



Hypocrite.

View attachment 430237

Just to clarify for other readers, have a read before Hasani's post and see if I even mentioned Iran, let alone compared it with KSA before he started the trolling. You will observe that I didn't.

You take strategic matters and try to convince people with tactical matters, that does not work in economy.. there is the macro-economy, and there is the micro economy, and there are different Data, analysis, estimations and much more.. You said you are a student of finances.. No teacher of yours has ever told you that economy is not an exact science and that it is based on probabilities and statistics!?

"Saudi Arabia represent the fifth largest global economy in the international investment scene with 2.64 trillion riyals by the end of 2015"
 
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Now how stupid can you be.. that was all his post?.. you are really sick

@The Eagle

I can show the readers dozens of posts where you compare Iran to KSA ..in Arab threads not concerning Iran at all

And you think I do that unprovoked? Even in the other thread, it was a response to Hasani's offensive remarks about Iran and our economy.

You take strategic matters and try to convince people with tactical matters, that does not work in economy.. there is the macro-economy, and there is the micro economy, and there are different Data, analysis, estimations and much more.. You said you are a student of finances.. No teacher of yours has ever told you that economy is not an exact science and that it is based on probabilities and statistics!?

What on earth are you on about? I'm talking about economy and recession, you're talking about "tactical matters"?
 

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