Economic growth surged last year amid a huge windfall from high oil prices which averaged about $100 per barrel, resulting in the highest GDP growth among G20 nations and the country’s first budget surplus in almost a decade.
But oil activities decreased by 17.3% in the third quarter from a year earlier, the General Authority for Statistics data showed, pulling overall growth lower despite non-oil growth of 3.6% and expansion in government activities of 1.9%.
The kingdom has extended a voluntary production cut of 1 million barrels per day until the end of the year which it says is a preemptive move to stabilise the market.
Monica Malik, chief economist at Abu Dhabi Commercial Bank, estimates overall GDP will contract 0.8% in 2023.
“The non-oil data points to a softening in momentum, though the high government spending backdrop is visible in the 3Q data and will be supportive,” she said.Saudi Arabia, the world’s top oil exporter, is midway through an economic transformation plan known as Vision 2030, putting an expanded private sector and non oil growth at the centre of the kingdom’s future development agenda.Non-oil growth is forecast at around 6% in 2023 with higher government spending over the coming years expected to boost domestic demand further, and support non-oil GDP.