The Saudi economy, the largest in the Middle East, has achieved positive growth in the first quarter of this year, at 1.2 percent, a sign on the feasibility of economic reforms aimed at diversifying the economy and reducing oil dependency. Saudi General Authority for Statistics (GASTAT) indicated the GDP of the non-oil sector in Saudi Arabia achieved a more positive rate during the first quarter of this year, a growth of 1.6 percent. Saudi GDP rose 1.2 percent at the end of the first quarter to reach $172.7 billion compared compared to $170.7 billion during the same period last year, the data showed. Non-oil GDP increased 1.6 per cent by the end of the first quarter of this year, reaching $98.9 billion. GDP of the oil sector rose 0.6 percent to $72.8 billion compared to $72.4 billion of the first quarter of previous year. Its contribution to the national GDP reached 42.2 percent, compared to 42.4 percent during the same period of previous year. In May, oil prices rose to around $80 per barrel, compared to less than $30 a barrel early 2016, when OPEC countries led by Saudi Arabia and non-OPEC producers agreed to cut output. Data released by GASTAT show a remarkable improvement in the annual growth of actual GDP during the first quarter of 2018. The national economy grew 1.2 percent. This positive growth comes after four quarters of deflation, which means the economy is emerging from the effects of lower oil prices and some structural reforms. The improvement was mainly driven by faster growth in both GDP of the oil and non-oil sectors. The oil sector grew by 0.6 percent in the first quarter, compared to a contraction of 4.3 percent in the fourth quarter of 2017. Growth in the non-oil sector reached 1.6 percent, up from 1.3 percent in the fourth quarter of 2017. When considering the contribution of economic activities to the growth of the non-oil sector, most of the growth was due to the improvement in non-oil industry and mining, both growing by 4.6 percent and 6.3 percent respectively. Government and financial services contributed significantly to the growth of the non-oil sector. Growth in governmental services increased to 3.4 percent, compared to 3.2 per cent in the fourth quarter of 2017, while that of financial services went up to 2.1 percent after it were 0.8 percent in the fourth quarter of 2017. Growth is expected to continue in this sector after the Saudi stock market is listed in the MSCI Emerging Markets Index and the launch of the Financial Sector Development Program. Recently, the International Monetary Fund (IMF) praised the positive economic reforms that Saudi Arabia is working on, while stressing that the implementation of some initiatives aimed at increasing non-oil revenues are a significant achievement. This comes at a time when the figures of the quarterly report of the Saudi budget revealed a significant increase in non-oil revenues during the first quarter of 2018. According to a statement by IMF staff that completed its mission to Saudi Arabia, the country’s growth is expected to pick-up this year and over the medium-term as reforms take hold. “The primary challenges for the government going forward are to sustain the implementation of the bold structural changes that are underway, meet the medium-term fiscal targets it has set, and resist the temptation to re-expand government spending in line with higher oil prices,” added the statement. The IMF noted that considerable progress is being made to improve the business climate, with recent efforts having focused on the legal system and business licensing and regulation. The exchange rate peg to the US dollar continues to serve Saudi Arabia well given the structure of the economy, according to the IMF. “While progress has been made in increasing data availability, more needs to be done to ensure that an accurate and timely assessment of economic developments is possible,” it concluded. In a new indication that confirms Saudi Arabias ability to translate its economic reforms into reality, the Ministry of Finance announced the country’s quarterly budget performance report. Figures showed non-oil revenues grew 63 percent in the first quarter of 2018, compared to the same quarter last year. "These figures confirm that the government of the Custodian of the Two Holy Mosques is making remarkable progress in its financial initiatives, as planned in the Fiscal Balance Program," said Finance Minister Mohammed al-Jadaan.