Saudi Arabia’s economy grew 9.9 per cent in the first quarter of 2022 to record the highest rate of growth in the last 10 years amid increased activity in the oil sector, the latest government data shows.
Oil-related economic activity in the kingdom rose 20.3 per cent annually during the first three months of the year, while non-oil economic activity grew 3.7 per cent during the period, according to the General Authority for Statistics (Gastat) data.
Government services activities also increased 2.4 per cent, supporting the growth of the Arab world’s largest economy.
The latest statistics come as oil prices continued to trade higher amid supply concerns as EU moves to sanctions Russian oil and gas imports.
Brent, the global benchmark for two thirds of the world's oil, which climbed 67 per cent last year, has risen another 50 per cent this year, driven by Russia's war in Ukraine that is threatening global energy supplies. It touched the 14-year high of almost $140 per barrel in March before giving up some gains to trade near $120 per barrel mark at present.
Saudi Arabia's economy has recovered strongly from the impact of the coronavirus pandemic, driven by higher oil revenue and improving non-oil GDP.
The kingdom's oil revenue is expected to jump about 66 per cent this year to roughly $249 billion amid surging crude prices that will enable the kingdom to boost spending, Jadwa said in a report earlier this month.
The accelerating pace of recovery underpins the kingdom’s economic growth, which the World Bank estimates at 7 per cent this year. Jadwa estimates the economy will expand 7.7 per cent in 2022.
The kingdom’s oil sector is projected to expand 15.5 per cent while the non-oil economy is expected to grow 3.4 per cent in 2022.
The International Monetary Fund has also revised its growth forecast for Opec’s biggest producer in its latest World Economic Outlook on the back of higher oil prices.
The kingdom’s economy is now expected to grow 7.6 per cent this year, up 2.8 percentage points from IMF's January estimates, and 3.6 per cent in 2023, up 0.8 percentage points from the previous forecast, the Washington-based fund said in April.
Others have also projected strong growth for the Saudi economy this year. Japan's largest bank MUFG expects the Saudi economy to expand 7.6 per cent in 2022, while Emirates NBD forecasts 6 per cent growth.
Hiring activity has also picked up in the kingdom as the economy rebounds, according to a separate Jadwa report.
Participation of Saudi citizens in the job market rose to 51.5 per cent by the end of 2021, up marginally from 51.2 per cent in 2020, with the private sector recording a significant increase. The number of Saudis employed in the private sector rose to 1.91 million by the end of last year, said Jadwa.
“The recovery in the labour market during 2021 was associated with a significant rebound in the kingdom’s non-oil economy,” Jadwa said.
“With robust levels of non-oil activities growth anticipated in 2022, we expect further rises in the number of Saudi and expat workers in many sectors.”
The unemployment rate among citizens is expected to drop to 10.7 per cent in 2022 and 10.4 per cent in 2023, after declining to 11 per cent in 2021 from 12.6 per cent in 2020 as the economy continues to recover, said Jadwa.
S&P Global Ratings has affirmed Saudi Arabia’s rating at A-/A-2 with a strong payment capacity and revised its outlook to positive from stable, citing improving GDP growth and fiscal dynamics over the medium term.
“The positive outlook reflects our expectation of improving GDP growth and fiscal dynamics over the medium term tied to the country’s emergence from the Covid-19 pandemic, improved oil-sector prospects and the government’s reform programmes,” the agency said in March.
S&P expects the kingdom’s economy to grow 5.8 per cent this year and by an average of 2.7 per cent from 2023 to 2025.
