Saudi plan to wean off oil sees success even as economy stalls

DUBAI (Bloomberg) - Saudi Arabia’s economy shrank 0.5% in the third quarter, a contraction that was broadly expected even as the kingdom’s goal of weaning itself off crude began to pay off with solid growth in non-oil sectors.

The overall economy was weighed down by shrinkage of 6.4% in the country’s oil sector, according to data released Tuesday by the General Authority for Statistics. Overall growth for 2019 is expected to accelerate to a modest 0.4%, according to the latest government estimates, before climbing to 2.3% next year.

Non-oil sectors of the economy grew 4.3% in the third quarter compared to about 2% for the same period of 2018, a sign of Crown Prince’s Mohammed bin Salman’s initiative to diversify the world’s top oil exporter’s economy from crude.

Earlier this year, Finance Minister Mohammed Al-Jadaan said the government plans to gradually reduce spending as private-sector growth picks up and businesses take the lead.