Saudi Arabia's economy beats initial estimates with 8.8% growth in third quarter

The non-oil private sector contributed 50.7% to the kingdom's GDP amid the push for economic diversification

The King Abdullah Financial District in Riyadh. Saudi Arabia's non-oil private sector economy rose at a sharp pace in the three months to the end of September. Bloomberg

Saudi Arabia's economy grew by 8.8 per cent in the third quarter of 2022 from the same period a year ago, exceeding initial estimates, driven by a sharp rise in both oil activities and non-oil activities, government statistics show.

Growth in the Arab world's biggest economy during the three months to the end of September was higher than the 8.6 per cent third-quarter flash estimate released at the end of October, the latest data by General Authority for Statistics (Gastat) on Sunday showed. Quarter on quarter, the kingdom’s gross domestic product expanded 2.1 per cent.

Oil-related activities in the kingdom, Opec’s biggest crude producer, grew by 14.2 per cent year-on-year in the three-month period. It grew 4.5 per cent on the second quarter of this year. Oil activities in the kingdom include the production of crude oil, natural gas and refining activities.

Non-oil activities boosted GDP by 6 per cent, an upwards revision from the 5.6 per cent flash estimate in October, Gastat data showed. However, on a quarterly basis, the non-oil sector recorded a 0.5 per cent decrease.

Government services activities grew by 2.5 per cent annually and 1.5 per cent on the previous quarter.

This is the kingdom's sixth consecutive quarter of economic expansion after the Covid-19 pandemic slowed activities. However, third-quarter growth slowed from the 12.2 per cent the kingdom posted in the second quarter of 2022 and the 7 per cent recorded in the corresponding quarter of 2021.

Saudi Arabia's GDP at current prices reached 1.03 trillion riyals ($275.53 billion) in the third quarter, with crude petroleum and natural gas activities contributing 35.2 per cent of GDP.

The non-oil private sector contributed 50.7 per cent to the national economy, with manufacturing (excluding petroleum refining) accounting for the biggest share with a 7.8 per cent contribution.

Government services activities contributed to GDP 14.1 per cent.

“All economic activities showed positive annual growth in the third quarter of 2022,” Gastat said.

Crude petroleum and natural gas activities grew at the highest rate of 14.8 per cent annually and 5.2 per cent on a quarterly basis. This was followed by manufacturing, excluding petroleum refining activities, with a growth of 11 year-on-year and a decline of 2.3 per cent on the second quarter.

Transport, storage and communication activities grew by 9 per cent from the third quarter of 2021 and 3.3 per cent from the second quarter of 2022.

In October, Saudi Arabia's Industrial Production Index increased by 14.1 per cent compared to the same month last year, driven by high production in mining, quarrying and manufacturing activities, Gastat said in a separate report on Sunday.

Since mid-2021, the IPI showed a positive growth trend, accelerating at the end of 2021 and continuing to grow in double-digits in 2022, the authority said.

Mining and quarrying grew by 12 per cent compared to October 2021 as Saudi Arabia increased its oil production to more than 10 million barrels per day in October 2022.

Manufacturing activity increased by 23.2 per cent compared to the same month of last year. Electricity and gas supplies decreased by 1.8 per cent annually.

In September, the value of the country's oil exports rose 43.4 per cent to 100 billion riyals, compared to 70 billion riyals in September 2021, according to Gastat.

The value of non-oil exports (including re-exports) during September 2022 reached 24 billion riyals, compared to 25 billion riyals during September 2021, a 3.4 per cent decline.

Saudi Arabia, the world's biggest oil exporter, made a strong rebound from the coronavirus-induced slowdown, with economic momentum picking up pace this year amid a sharp rise in oil prices.

The kingdom raised its fiscal surplus estimates for this year and next year, reflecting its confidence in its economic reform programme that has been strengthened by higher oil prices.

Saudi Arabia approved a 1.114 trillion-riyal budget for 2023 last week and forecasts a surplus of 16 billion riyals, equal to 0.4 per cent of GDP. This compares with a previous surplus estimate of 9 billion riyals announced in a pre-budget statement three months ago.

Saudi now expected to grow 8.5 per cent this year, up from a previous forecast of 8 per cent, Finance Minister Mohammed Al Jadaan said last week.