Saudi Arabia's economy, the biggest in the Arab world, grew by 1.1 per cent in the second quarter, boosted by a sharp expansion in the country’s non-oil sector as the kingdom pushes to diversify its economy away from hydrocarbons.
The non-oil sector grew 5.5 per cent in the three-month period to the end of June, compared with the same period in 2022, according to the flash estimate by the General Authority for Statistics.
A 2.7 per cent year-on-year increase in the government services activities also helped in boosting growth during the reporting period, Gastat data showed on Monday.
Seasonally adjusted real gross domestic product decreased by 0.1 per cent in second quarter of 2023 compared to the first quarter of this year.
“This effect was due to the decrease in oil activities by 1.4 per cent,” Gastat said. “Non-oil activities increased by 1.8 per cent and government services activities grew by 0.6 per cent on a quarterly basis.”
Saudi Arabia’s economy expanded 8.7 per cent in 2022, the highest annual growth rate among the world's 20 biggest economies, driven by a rise in oil prices and strong performance of its non-oil private sector.
The kingdom has carried growth momentum forward, albeit at a slower place, from the first quarter of this year when its GDP expanded 3.8 per cent on an annual basis. Non-oil sector economy grew at 5.4 per cent year on year, while oil economy expanded 1.4 per cent in the first three months of the year.
Oil activities in the second quarter, however, contracted by 4.2 per cent, primarily dragged lower by the oil production cuts.
The kingdom’s economy is forecast to grow by 1.9 per cent this year, instead of 3.1 per cent as previously projected, largely a reflection of production cuts and lower oil prices.
Growth in the kingdom is expected to pick up to 2.8 per cent in 2024, the Washington-based fund said in its latest World Economic Outlook update.
Saudi Arabia has benefitted from the rally in crude prices last year. However, crude prices are projected to fall by about 21 per cent in 2023, with the assumed average price per barrel, based on futures markets, at $76.43 in 2023 and $71.68 in 2024, compared with $96.36 in 2022, the IMF said.