Saudi Arabia’s economy grew 2.8% YoY during the third quarter of 2024 due to strengthened non-oil activity. This came after four consecutive quarters of contraction.
Details
Preliminary estimates of the General Authority for Statistics (GASTAT) showed that expansion in the country’s real GDP during the three months ending in September resulted from a 4.2% YoY hike in non-oil activities.
At the same time, government activities experienced a 3.1% YoY uptick.
Quarterly, real GDP grew at a 0.8% clip.
So what
In its report, GASTAT noted that the Kingdom’s oil sector grew by 0.3% YoY in the third quarter after contracting in the preceding five quarters.
This is despite the Kingdom continuing to cut its oil production as part of its agreements with the OPEC+ alliance.
As the world’s largest oil exporter among the eight member countries of the alliance, Saudi Arabia decided to extend its voluntary production cuts.
These cuts amount to 2.2 million barrels daily and will remain until November 2024.
Some context
Growth in KSA, the largest Arab economy, is expected to remain weak for the rest of the year, amid falling oil prices and production, which took a toll on government revenues.
A Reuters survey predicts that the Saudi economy will grow at a 1.3% clip this year.
This is a “slightly more conservative” estimate than the International Monetary Fund’s recently adjusted forecast of 1.5%.
It is also among the slowest growth rates in the Gulf Cooperation Council countries.
Now what
Oil production is expected to increase next year, which will lead to a recovery in Saudi Arabia’s overall economic growth.
This will continue to be supported by non-oil activities.
While the state’s public finances largely depend on revenues from hydrocarbons, efforts to boost non-oil growth have accelerated.
In addition to developing new sources of income, these efforts align with the Kingdom’s “Vision 2030” strategy.
Non-oil GDP currently accounts for over 50% of the country’s GDP.
Despite the slowdown in non-oil growth this year, it is still estimated at around 4%.
However, this is below the average of nearly 6% over the past three years.
