Saudi Arabia's Q4 GDP expands at fastest quarterly pace since 2022

Both the oil and non-oil sectors of the kingdom's economy grew during the three-month period, government data shows

Crown Prince Mohammed bin Salman is pushing to overhaul the kingdom's economy under its Vision 2030 programme. AFP

Saudi Arabia’s economy grew at the fastest pace since 2022 during the fourth quarter of last year, buoyed by expansion of both the oil and non-oil sectors as the kingdom continues to pursue its economic diversification agenda.

The country’s gross domestic product grew by 4.4 per cent on an annual basis during the three-month period to the end of December “supported by the growth of key economic activities”, the kingdom’s General Authority for Statistics said on Thursday.

This rise is markedly higher than the 2.8 per cent year-on year GDP growth recorded in the third quarter of 2024, and is the sharpest rate of expansion in the past two years, according to Gastat data.

The non-oil sector of Saudi Arabia, the biggest Arab economy, expanded by 4.6 per cent on an annual basis for the three months to the end of December, Gastat said in its latest quarterly flash estimates. The oil sector recorded a 3.4 per cent jump − up from a 0.05 per cent rise reported in the third quarter of 2024.

This preliminary data also showed that the seasonally adjusted real GDP increased by 0.3 per cent in the last quarter of 2024, compared to the July-September period last year.

“There was positive momentum” towards the end of 2024, and the “non-oil sector also ended the year strongly”, Daniel Richards, senior Mena economist at Emirates NBD said in a note on Thursday.

“A major contributing factor to this was the return of oil GDP to growth for the first time since first-quarter 2023.”

The kingdom, Opec’s biggest crude producer, did not have to take the burden of additional Opec+ oil production curbs through the year, which means that “those introduced 12 months earlier started to pass through into the base and no longer exert a drag on headline output”, Mr Richards added.

The quarterly flash estimate of GDP provides an assessment of an economy’s health and the estimated pace of growth. Gastat said it will publish the final real GDP growth results in March.

Saudi Arabia is focused on diversifying its economy away from oil as part of the kingdom’s Vision 2030 overarching transformation agenda, which also seeks to boost employment and foreign direct investment into the country.

The kingdom is focusing on tourism, health and education and has also launched multi-billion-dollar projects to support the development of technology, property and infrastructure projects. It is also expanding its industrial and mining base.

In June 2024, Saudi Minister of Investment Khalid Al Falih said the kingdom was more than halfway through implementing Vision 2030. However, Finance Minister Mohammed Al Jadaan said the timetable and size of some of the projects under Vision 2030 would be adjusted because of economic and geopolitical challenges.

Three months later, S&P said continued execution of Vision 2030 initiatives will support strong non-oil growth over the medium term, while the recalibration of some large infrastructure projects will help contain pressure on Saudi public finances.

The ratings agency expects the kingdom’s GDP to continue growing until 2027, boosted by investments in the non-oil sector, the rise in consumption rates and its expectation that the country will emerge in the long term as a more diversified economy.

Saudi Arabia estimates its economy to expand by 4.6 per cent this year and 3.5 per cent in 2026. Earlier this month, the International Monetary Fund downgraded its GDP expansion forecast for the kingdom by 1.3 percentage points to 3.3 per cent for 2025, citing slower growth of the oil sector and extend production cuts by Opec+.