* Austerity steps weakening growth since early 2015
* Analysts think Q2 data may ultimately be revised lower
* Imports, other indicator show non-oil sector struggling
* Cuts to public sector allowances announced this week
By Andrew Torchia
DUBAI, Sept 30 Saudi Arabia's economy grew at
its slowest rate in more than three years between April and
June, government data showed on Friday, and some analysts said
the figures might be understating the extent of the blow from
low oil prices.
Growth has been weakening since early 2015 as cheap oil
slashes state revenues and pushes the government into spending
cuts, which are weighing on the private sector and consumer
Gross domestic product, adjusted for inflation, rose 1.4
percent from a year earlier in the second quarter of 2016, after
growth of 1.5 percent in the first quarter. It was the slowest
growth since 0.3 percent in the first quarter of 2013.
The oil sector expanded 1.6 percent from a year ago, slowing
from 5.1 percent growth, while the non-oil sector grew 0.4
percent, recovering from a fall of 0.7 percent in the previous
quarter. The private sector grew just 0.1 percent in the second
The figures suggested the Saudi economy was faring better in
the face of oil's slump than many people feared. Nevertheless,
analysts said Saudi data could be erratic - growth for the
fourth quarter of 2015 was ultimately revised down to 1.8
percent from an original estimate of 3.6 percent - and said
there could be a similar revision in this case.
"There's a good chance that the figures will be revised
down," said Jason Tuvey, Middle East economist at London-based
Other indicators such as imports suggested the non-oil
private sector may have slowed further than the government data
showed, he said.
Monica Malik, chief economist at Abu Dhabi Commercial Bank,
said she had expected some improvement in the second quarter but
that the non-oil sector's positive growth was surprising. She
also said second-quarter data for the non-oil sector might
eventually be revised lower.
In any case, she said, the economy would remain under
pressure from austerity policies for the rest of this year. The
non-oil sector looks set to contract for 2016 as a whole, she
This week, the cabinet announced it was cutting bonuses and
other financial perks for public sector workers; since such
allowances account for as much as 30 percent of many Saudis'
income, the policy may have a significant impact on consumer
spending and saddle banks with more non-performing consumer
(Reporting by Andrew Torchia)