Saudi Arabia’s economy exhibited resilient growth in the second quarter of this year, surpassing initial estimates, primarily driven by a robust expansion in the non-oil sector. The Arab world’s largest economy reported a GDP growth rate of 1.2%, a slight uptick from the earlier projections. According to the General Authority for Statistics (Gastat), the kingdom’s GDP at current prices reached an impressive 970 billion riyals ($258.66 billion) in the three months ending in June.
Crucially, the petroleum and natural gas sectors, constituting 25% of the country’s GDP, played a pivotal role in this economic performance. Government services activities contributed 15.6%, while wholesale and retail trade, along with restaurants and hotels, accounted for 9.7%, as per government data.
Compared to the flash estimate released in July, Gastat reported that the kingdom’s economy expanded 0.1 percentage points faster in the second quarter. However, the true standout was the non-oil sector, which demonstrated an impressive 6.1% annual growth rate, surpassing Gastat’s initial estimate of a 5.5% expansion during the same period.
Government services also saw a noteworthy annual increase of 2.3%, further propelling the nation’s economic growth, as revealed by Gastat data.
In their official statement, Gastat noted, “Most economic activities recorded positive growth rates on an annual basis in the second quarter of 2023.” Among them, transport, storage, and communication activities recorded the highest growth rates, expanding by 12.9% year on year and 3.1% quarter on quarter.
Additionally, wholesale and retail trade, restaurants, and hotel activities in the kingdom registered a robust 9.8% annual growth rate during Q2, although the increase from the previous quarter was a more modest 2.1%. Meanwhile, community, social, and personal services activities saw a 9% annual growth and a 2.3% quarterly uptick.
Despite this impressive growth, Saudi Arabia’s seasonally adjusted real GDP experienced a slight dip of 0.2% in Q2 2023 when compared to the first quarter of the same year. The contraction in oil activities was particularly pronounced, with a 4.4% annual decrease and a softer 1.5% quarterly decline.
This economic performance comes on the heels of Saudi Arabia’s stellar 8.7% GDP growth in 2022, ranking it as the world’s fastest-growing economy among the top 20 global economies. This growth was driven by rising oil prices and a robust non-oil private sector.
However, the International Monetary Fund (IMF) recently downgraded Saudi Arabia’s economic growth forecast among G20 nations. Projections for 2023 now stand at 1.9%, down from the previous estimate of 3.1%, primarily attributed to production cuts and lower oil prices. Nonetheless, the IMF anticipates a rebound, with a growth rate of 2.8% forecast for 2024.
Despite global headwinds, the IMF maintains a positive outlook for Saudi Arabia, commending the nation’s economic transformation, reforms, and the recent surge in oil prices. Riyadh has impressively reduced unemployment to record lows, managed inflation, and maintained robust external and fiscal reserves.
In conclusion, Saudi Arabia’s economy demonstrates resilience and adaptability in the face of challenges, showcasing the kingdom’s commitment to sustainable growth and economic diversification. The outlook for the nation remains positive, even amidst global economic fluctuations.
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