Saudi Arabia's gross domestic product expanded 2.5 per cent in the fourth quarter of 2020 from the previous three months as the economy continued its recovery from a pandemic-induced slowdown.
The kingdom's non-oil economy expanded 2.4 per cent in the final quarter last year, data from the General Authority for Statistics on Tuesday showed. Saudi Arabia's oil economy grew by 2.6 per cent in the fourth quarter as crude prices rallied amid improved economic conditions.
The non-oil private sector in the Arab world's biggest economy expanded by 3.2 per cent quarter-on-quarter, while the government sector grew by 0.6 per cent during the period.
“There was a solid rebound in economic activity in Q4 and the [kingdom’s] investment programme supports the growth outlook going forward,” Monica Malik, chief economist at Abu Dhabi Commercial Bank, said. “The fact that we will have substantially higher oil revenue this year is positive for confidence.”
Saudi Arabia’s GDP, however, contracted 3.9 per cent in the fourth quarter on an annual basis. The country’s oil sector shrank by 8.5 per cent, while its non-oil sector contracted by 0.8 per cent from the same period in 2019.
“The kingdom has managed oil prices very well, but going forward, there are challenges on that front,” Ms Malik said.
Scott Livermore, chief economist and managing director at Oxford Economics, said he expects "growth to be resilient to any fall back in the oil price" since Saudi Arabia has good access to international debt markets.
The Arab world's largest economy is diversifying under its Vision 2030 programme by developing a strong non-oil economy. Attracting foreign capital into its industrial, defence, mining, retail, health and education sectors is one of the central planks of Riyadh’s transformation ambitions.
Mr Livermore expect Saudi Arabia to continue recovering "strongly" from the Covid-19 pandemic, with its non-oil GDP expanding 3.6 this year and accelerating to more than 4 per cent in 2022. The International Monetary Fund expects the country's economy to grow 2.6 per cent after shrinking an estimated 3.9 per cent last year.
"Growth will be driven in a large part by public sector investment, particularly by the PIF [Public Investment Fund]," he said.
The kingdom’s GDP at current prices reached 697.6 billion riyals ($186.bn) in the fourth quarter of 2020. The private sector accounted for 50.5 per cent of the country's GDP, followed by the government sector with a share of 25.4 per cent and the oil sector accounting for 24.1 per cent, according to government data.
GDP per capita amounted to 19,695 riyals in the fourth quarter of 2020, up 3.8 per cent on the prior quarter but down 11.7 per cent from the same quarter of the previous year.
