Saudi Arabia’s economy accelerated in the first quarter of 2015, showing the world’s top oil exporter can cope with low energy prices, but growth may slow as the government faces pressure to rein in spending. Gross domestic product, adjusted for inflation, grew 2.4 per cent from a year earlier in the first quarter, against a revised 1.6 per cent in the fourth quarter of 2014, the state statistics department said on Thursday. The figures indicated Saudi Arabia had offset the impact of oil’s 50 per cent plunge since mid-2014 with a combination of heavy state spending and a strong private sector. “Today’s data add to the evidence that Saudi Arabia’s economy has weathered the storm created by lower oil prices relatively well so far,” wrote Jason Tuvey, Middle East economist at London-based Capital Economics. There are no signs that the economy is collapsing, as some had feared. ”The oil sector, which accounts for about 40 per cent of the economy, grew 1.8 per cent in the first quarter as Saudi Arabia ramped up production to gain global market share. It had shrunk 0.7 per cent in the fourth quarter. The private sector expanded 3.3 per cent, slowing from 4.7 per cent but staying robust as the retail and construction industries boomed. Monica Malik, chief economist at Abu Dhabi Commercial Bank, said other recent data and a bullish mood in the private sector suggested first-quarter growth might well be revised higher.
