Oil attacks to hit Saudi growth, but damage may be partially offset World Bank

Friday, 11 October 2019 00:04 -     - {{hitsCtrl.values.hits}}

Workers are seen at the damaged site of Saudi Aramco oil facility in Abqaiq, Saudi Arabia – Reuters

DUBAI (Reuters): The attacks on Saudi Arabia’s oil facilities last month are expected to impact economic growth this year, the World Bank said in a report, adding that the decline could be partially offset by a boost in government spending in the non-oil sector.

Saudi Arabia’s gross domestic product (GDP) growth this year is forecast at 0.8%, down from an earlier World Bank estimate of 1.7% in April, pressured by oil production cuts and a worsening global outlook, according to the report.

The World Bank’s estimate is well below Saudi Arabia’s own expectations of around 1.9% GDP growth this year.

Government data showed last month the Saudi economy slowed sharply in the second quarter, paying the price of restraining crude production by more than called for by an OPEC-led supply deal to support oil markets.

Saudi officials have said the Sept. 14 strike would not affect state finances or growth, but investors and analysts said they could have a long-term impact on ambitious plans to diversify the Saudi economy and attract foreign capital. “The attacks on Saudi oil facilities in September led to a significant supply disruption which is also expected to impact 2019 growth,” said the World Bank.

The attacks initially halved the kingdom’s crude production. The World Bank added however that the slowdown is likely to be partially offset by a boost to the non-oil sector coming from higher government spending this year. Riyadh blamed adversary Iran for the strikes, a charge Tehran denies.

Rating agency Fitch downgraded Saudi Arabia’s credit rating to A from A+ last month, citing rising geopolitical and military tensions in the Gulf after the attacks.