Saudi Arabia’s real gross domestic product (GDP) fell 1.8% year-on-year in the first quarter, according to flash estimates from the government’s statistical authority, as the decline in oil activities continued to hurt to overall growth.
The kingdom’s GDP contracted by 3.7% in the fourth quarter of 2023, as cuts in oil production and falling crude prices weighed on the economy.
Saudi Arabia, the world’s largest oil exporter, is pumping about 9 million barrels per day (bpd), well below its capacity of about 12 million bpd after cutting production under a agreement with OPEC and other oil producers.
Oil activities fell 10.6% in the first quarter from a year earlier, according to estimates from the General Statistics Authority, while non-oil GDP rose 2.8% year-on-year and government activities increased by 2%.
On a quarterly basis, seasonally adjusted growth increased by 1.3% from the previous quarter, driven by a 2.4% increase in oil activities and a 0.5% growth in non-oil activities, although government activities declined by 1%.
The kingdom’s economy contracted by 0.9% in 2023, data showed, dragged down by the oil sector, while non-oil activities grew by 4.6% last year.
This situation contrasts sharply with that of 2022, when Saudi Arabia was the best performing economy in the G20 group, boosted by an oil windfall that allowed it to achieve growth of 8.7% and post its first surplus budget in almost ten years.
Saudi Arabia needs hundreds of billions to meet the goals of its plan to diversify the economy away from oil, known as “Vision 2030.”
