(Bloomberg) -- Saudi Arabia’s economy expanded at a weaker pace for a second quarter, dragged down by curbs on crude output negotiated by OPEC, even though non-oil growth picked up.
Gross domestic product expanded 0.5% in the second quarter from a year earlier, the slowest since it contracted in 2017. The oil sector shrank an annual 3%, while non-oil growth accelerated to almost 3%.
The biggest Arab economy is still struggling to cope with lower oil prices and a slew of policy changes that hit businesses hard, including subsidy cuts and a value-added tax. Private-sector confidence was also hurt by a declared crackdown on corruption in November 2017 that ensnared dozens of billionaires and officials in the Ritz-Carlton hotel in Riyadh.
While the recent improvement in non-oil growth is encouraging as Saudi Arabia tries to diversify the economy, the overall picture still shows that oil is king.
Saudi Arabia has led efforts to stabilize the oil market by ending years of animosity with Russia in 2016 and joining forces to prop up prices. The price of benchmark Brent crude averaged just under $67 a barrel in the second quarter of 2019, compared with nearly $80 during the same period last year.
Output cuts by OPEC and its partners continue to weigh heavily on the economy. Although it was dealt another blow this month after the biggest attack ever on its oil industry, the kingdom is quickly reviving production.