RIYADH: Affirming Saudi Arabia’s progress in its economic diversification journey, the Kingdom’s real gross domestic product grew by 1.1 percent in the second quarter of this year compared to the same period of 2022, according to the General Authority for Statistics.
The flash estimates by GASTAT showed that Saudi Arabia’s economic growth was driven by non-oil activities which increased by 5.5 percent annually in the second quarter.
Strengthening the non-oil sector is a crucial agenda of Saudi Arabia’s Vision 2030, as the Kingdom is steadily diversifying its economy which has been dependent on oil for several decades.
According to the GASTAT report, government services activities increased by 2.7 percent in the second quarter, while oil activities dipped by 4.2 percent on an annual basis.
The fall in oil activities was primarily due to the decision taken by the Organization of the Petroleum Exporting Countries and its allies, known as OPEC+, to reduce oil output by 1.2 million barrels per day. In those cuts, Saudi Arabia pledged to reduce output by 500,000 bpd.
In June, the Kingdom also announced an additional cut of 1 million bpd for the month of July.
The report added that Saudi Arabia’s seasonally adjusted real GDP decreased by 0.1 percent in the second quarter of this year compared to the previous quarter.
“This effect was due to the decrease in oil activities by 1.4 percent. Non-oil activities increased by 1.8 percent and government services activities grew by 0.6 percent on a quarterly basis,” said GASTAT in the report.
Earlier in June, the International Monetary Fund, citing prolonged oil output cuts, slashed its 2023 GDP growth projection for Saudi Arabia to 1.9 percent.
In its World Economic Outlook update, the IMF revised its growth forecast for the Kingdom to 2.1 percent in June from its earlier prediction of 3.1 percent in May.
“The downgrade for Saudi Arabia for 2023 reflects production cuts announced in April and June in line with an agreement through OPEC+, whereas private investment, including from giga-project implementation, continues to support strong non-oil GDP growth,” said the IMF in its report.
