UPDATE 1-Saudi finance minister says oil GDP to fall 3% this year

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RIYADH, Oct 31 (Reuters) - Saudi Arabia expects its oil gross domestic product (GDP) to fall by 3% this year, its finance minister said on Thursday.

“For the non-oil GDP we maintained GDP growth at 2.9%,” Mohammed al-Jadaan said at the Future Investment Initiative conference in Riyadh.

Foreign direct investment has increased year to date, Jadaan said, adding that local private investment grew 1.3% in the first half of the year.

“We are seeing less demand on budget expenditure on certain infrastructure projects because they are being offered through PPP (public-private partnership),” Jadaan added.

The International Monetary Fund this month slashed its 2019 growth forecast for the kingdom to 0.2% from 1.9%, due largely to oil output cuts after an attack on its oil facilities in September.

The Saudi economy, the largest in the Arab world, has suffered in recent years because of low oil prices and austerity measures aimed at reducing a huge budget deficit.

Reporting by Marwa Rashad and Davide Barbuscia, writing by Nafisa Eltahir; editing by John Stonestreet and Jason Neely