Saudi Arabia to spend big after economy shrinks

RIYADH: Saudi Arabia said on Tuesday its economy contracted for the first time in eight years due to painful austerity measures as it announced record spending to stimulate growth. The OPEC kingpin said gross domestic product for 2017 shrank by 0.5 percent due to a drop in crude production in line with an agreement with major oil producers aimed at boosting prices. The last time the Saudi economy contracted was in 2009, when GDP fell 2.1 percent after the global financial crisis sent oil prices crashing. Riyadh also posted a higher-than-expected budget deficit in 2017 and forecast another shortfall next year for the fifth year in a row due to the drop in oil revenues. It announced an expansionary budget for 2018, projecting the highest spending ever despite low oil prices in a bid to stimulate the sluggish economic, saying it expects the GDP to grow by 2.7 percent. Spending was projected at 978 billion riyals ($260.8 billion), up 10 percent on 2017 estimates, the Saudi finance ministry said in a statement.