Saudi Economy Shrinks 4.8% as Oil Output Plummets

Saudi Arabia's economy has taken a hit, shrinking by 4.8% from last year in the second quarter due to a significant decline in oil output.

The kingdom's statistical agency reported that oil activities fell 24.7% year over year, subtracting 5.4 percentage points from overall growth.

Non-oil activities added only 0.4 percentage points, and government services contributed just 0.1 percent. The contraction also showed up quarter-on-quarter: on a seasonally adjusted basis, the economy fell 4.9%, with oil activities down 21.5% and non-oil activities slipping 0.5%.

The drop in oil activity can have far-reaching consequences for the government's finances and spending power.