A bunch of warning signs have bubbled up in Saudi Arabia’s economy over the past few months.

The Saudi economy grew at just 1.5% in the first quarter, compared with the year before — its slowest rate since 2013.

And while the oil sector grew by 5.1% year-over-year, the non-oil sector shrank by 0.7% — the weakest reading in at least five years.

Moreover, output in the construction sector shrank by 1.9% year-over-year in July.

And, most recently, a note from Al Rajhi Capital pointed out that the Saudi Arabia Interbank Offered Rate, or Saibor, has nearly tripled — to about 2.3% from less than 0.8% — over the past year and is now facing a “liquidity squeeze in the market.”

But over the last few days, a couple of other signs have emerged that economists are keeping an eye on.

Official data reported on Sunday showed that net foreign assets at the Saudi central bank dropped to $555 billion in July, down $6 billion from the previous month, according to Reuters. This was a 16% drop compared with the year before, and the lowest level since February 2012.

And that’s notable because the Saudis have been dipping into reserves in light of the budget deficit and amid lower oil prices.

Furthermore, Capital Economics’ GDP Tracker, which is constructed from monthly activity data, suggests that the Saudi economy shrank by an estimated 2.3% year-over-year in June. And over the second quarter, the tracker estimates that output slumped by 2% year-over-year.

“If our tracker is correct, this would be the first contraction in the Saudi economy since 2009, in the midst of the global financial crisis,” said Jason Tuvey, Capital Economics’ Middle East economist.

Plus, the firm’s tracker suggests that the non-oil sector saw output fall by about 4.5% year-over-year in June— which would be the sharpest drop since 1986. Notably, it could be worth it to watch the Saudis’ non-oil industry as the government pushes forward with its plan to differentiate away from the oil sector.

That being said, Tuvey also argued that the rest of the year could see a recovery.

“As the authorities ease the pace of austerity, a recovery should get underway in the next few years. But it is likely to be slow-going — we expect growth of just 1.5% year-over-year in 2018, whereas the consensus and the [International Monetary Fund] have penciled in growth of more than 2%,” he said.

Official figures for the second-quarter GDP will be released at the end of September.

Source: www.businessinsider.com