Saudi Arabia's economy contracted by 1% in the first quarter, official data showed on Tuesday, but the figures only marginally captured the collapse in oil prices and the coronavirus crisis, which deteriorated in March.
"This negative growth originated mainly from the contraction in the oil sector by 4.6%, while the non-oil sector recorded a positive growth rate of 1.6%," the General Authority for Statistics said, citing preliminary estimates.
The world's largest oil exporter is facing its worst economic decline this year after the COVID-19 pandemic dampened global crude demand and measures to contain the coronavirus hurt the kingdom's non-oil economy.
"The coronavirus crisis means that this is somewhat old news and the figures for Q2 will almost certainly be terrible," James Swanston, MENA economist at Capital Economics said.
In the first quarter, the value of Saudi Arabia's oil exports plunged by about $11 billion year on year, and in April alone the drop was of about $12 billion, official data showed this month.
Sharp production cuts in May and June, aimed at lifting oil prices, are likely to weigh further on oil GDP in the second quarter, and figures released by the central bank this week showed the non-oil economy continued to suffer in May.
Profits for the banking sector posted an annual decline of nearly 40% in May and points of sale transactions were down by nearly 16%, according to Saudi Arabian Monetary Authority data.
"Lockdown measures and weak confidence continued to take a toll on spending," said Dubai-based Arqaam Capital, which estimated consumer spending fell by 32% year on year last month after a 35% decline in April.
Hoping to raise non-oil revenues, the government has ordered an increase in value-added tax, but this is likely to dampen consumer spending and slow down economic recovery as measures to contain the coronavirus are lifted, economists have said.
The International Monetary Fund estimates Saudi Arabia's economy will shrink by 6.8% this year.