Saudi Arabia's economy surges 5.5% in Q4 on higher non-oil and oil activities

The International Monetary Fund expects Saudi Arabia's economy to grow by 2.6 per cent this year and by 3.4 per cent in 2024. EPA

Saudi Arabia's economy grew by 5.5 per cent on an annual basis in the fourth quarter of last year, driven by a surge in the kingdom's oil and non-oil sectors, government estimates have shown.

Non-oil activities for the October-December period jumped 6.2 per cent, oil activities grew 6.1 per cent, while government services activities expanded by 2.9 per cent, the General Authority for Statistics (Gastat) said.

Oil sector activities included the production of crude, natural gas and refining operations.

Seasonally adjusted real gross domestic product grew by 1.3 per cent in the fourth quarter compared to the third quarter of 2022, driven by a 1.3 per cent rise in non-oil activities.

Most economic activities recorded positive growth in the last quarter, Gastat said.

Transport, storage and communication activities recorded the highest yearly growth rates of 13.1 per cent. They were followed by community, social and personal services (10.5 per cent), other mining and quarrying activities (8.4 per cent), and crude petroleum and natural gas (7.2 per cent).

The kingdom’s GDP at current prices stood at more than 1.02 trillion riyals ($272.75 billion) in the fourth quarter of last year, with crude petroleum and natural gas activities contributing 27.4 per cent to the national economy.

Government services activities accounted for 15.2 per cent while the manufacturing sector — excluding petroleum-refining activities — contributed 9 per cent.

The fourth-quarter GDP growth was Saudi Arabia’s seventh consecutive three-month expansion after the Covid-19 pandemic slowed economic activity in Opec’s biggest oil producer.

The real GDP of the Arab world’s largest economy grew by 8.7 per cent in 2022. It was underpinned by a sharp surge in oil activities, with an increase of 15.4 per cent, while non-oil activities and government activities grew by 5.4 per cent and 2.6 per cent, respectively, during the 12-month period to the end of December.

All economic activities achieved positive growth rates last year.

Crude petroleum and natural gas activities achieved the highest annual growth rates of 16.1 per cent, followed by transport, storage and communication (9.1 per cent), and petroleum refining (8.3 per cent).

The kingdom’s GDP at current prices amounted to more than 4.15 trillion riyals last year.

The crude petroleum and natural gas activities contributed 32.7 per cent to the economy. It was followed by government services, manufacturing excluding petroleum refining activities, and wholesale and retail, trade, restaurants and hotels adding 14.2 per cent, 8.6 per cent and 8.2 per cent, respectively.

The kingdom's preliminary estimates for 2023 indicate GDP growth of 3.1 per cent.

The International Monetary Fund expects the kingdom's economy to grow by 2.6 per cent this year and by 3.4 per cent in 2024.

Earlier this month, business activity in the non-oil economy of Saudi Arabia hit an eight-year high in February as output growth in the kingdom strengthened.

The reading for the Arab world's largest economy on the Riyad Bank purchasing managers' index rose to 59.8 in February from 58.2 in January, marking the fastest growth in non-oil private sector business conditions since March 2015.

The reading was well above the neutral 50 mark that separates growth from contraction.

Saudi Arabia's inflation rate for 2022 was estimated at 2.6 per cent and, according to preliminary forecasts, is expected to hit 2.1 per cent in 2023, Saudi Finance Minister Mohammed Al Jadaan said in December.