After a sharp slowdown in the second quarter .. Experts warn of an economic recession in Saudi Arabia

RIYADH (Reuters) - Saudi Arabia's economy slowed sharply in the second quarter of this year amid cuts in the world's top oil exporter, raising fears of an economic contraction this year, government data showed on Monday.

The economy grew 0.5 percent in the second quarter from a year earlier, down from an annual growth of 1.66 percent in the first quarter of 2019.

The Saudi economy grew by 1.58% in the second quarter of last year.

Monica Malik, chief economist at Abu Dhabi Commercial Bank, predicted Saudi Arabia's economy would shrink 0.1 percent this year.

"The slowdown in the overall growth figure of real GDP is expected, with the oil sector contracting, while Saudi Arabia is restricting crude production to support prices," Reuters reported.

Government data showed that the oil sector contracted by 3.02% in the second quarter of 2019, while the non-oil sector grew 2.94%.

The kingdom is curbing crude production more than an OPEC-led deal to boost oil markets calls, prompting some economists to expect limited growth or contraction in Saudi Arabia earlier this month.

Jason Toffe, chief emerging markets expert at Capital Economics, said in a note that details of the data showed that the slowdown between the first and second quarters was driven by oil production cuts.

After output of the oil sector grew 1 percent year-on-year in the first quarter, Tofi said, he returned and contracted in the second quarter. "In short, the Saudi economy is officially in recession now."

Today's data showed that on a seasonally adjusted basis, the Saudi economy shrank 0.64% from the first quarter.

Trade surplus declined
On September 27, Standard & Poor's said it expects Saudi real GDP to shrink by about 0.4% this year, mainly due to a drop in oil production due to the OPEC agreement and attacks on Aramco's oil facilities, which have cut production. Saudi crude oil by 50%.

The most recent economic contraction was in 2017, but the kingdom's economy then recovered to grow 2.2 percent last year, boosted by strong oil production.

Meanwhile, Saudi Arabia's foreign trade surplus (oil and non-oil) fell 17.1 percent year-on-year in the first seven months of this year.

According to an Anatolian survey based on data released by the Saudi Statistical Authority on Monday, the trade balance surplus was $ 70.4 billion, down from about $ 85 billion in the same period a year earlier.

Merchandise exports (oil and non-oil) fell 6 percent to 156.6 billion dollars, while imports rose 5.5 percent to 86.2 billion. The value of oil exports to Saudi Arabia during this period fell by 6% to $ 121.4 billion.

Saudi Arabia is the world's third-largest crude producer after the United States and Russia, averaging 9.8 million bpd and the world's largest exporter at 6.4 million bpd.