Economy

Saudi Arabia reports 5% increase in GDP

March 12, 2023, 7:38 AM

A Saudi trader monitors stocks. The $44bn borrowing figure for January 2023 surpasses the previous peak of $33bn, reached in January 2018 — The Saudi bank will focus will be on expanding its retail business

GDP grew 5.5% in fourth quarter of 2022
Crude petroleum and gas activities contributed 27.4%
The kingdom reported its first surplus since 2013

Saudi Arabia’s GDP increased by 5.5 percent year-on-year in the fourth quarter of 2022, according to the latest figures from the kingdom’s General Authority for Statistics.

Growth was fuelled by a 6.2 percent annual increase in non-oil business activity, while oil grew 6.1 percent and government activity 2.9 percent.

Crude petroleum and natural gas achieved the highest contribution to GDP at 27.4 percent, followed by government services (15.2 percent), then manufacturing excluding petroleum refining (9 percent).

Real GDP in Saudi Arabia for 2022 grew by 8.7 percent, largely as a result of increased oil activities (15.4 percent), helping its fiscal balance to record its first surplus since 2013.

Growth in Saudi Arabia’s non-oil business accelerated in January, having hit a three-month low the previous month, supported by an increase in new orders and output.

The seasonally adjusted Riyad Bank Saudi Arabia Purchasing Managers’ Index increased to 58.2 in January, from 56.9 in the previous month and well above the 50 mark separating growth from contraction.

However, in February the International Monetary Fund (IMF) revised its 2023 growth forecast for Saudi Arabia significantly downwards on the back of lower expected oil output.

Growth in the Arab world’s biggest economy is now forecast at 2.6 percent in 2023, underperforming the wider region, and 1.1 percentage points below the IMF’s October projection, weighing on overall growth among its neighbours.

The IMF predicts that the Middle East and central Asia region is projected to decline to 3.2 percent in 2023 from 5.3 percent in 2022, “mainly attributable to a steeper than expected growth slowdown in Saudi Arabia”.

“The downgrade for 2023 mainly reflects lower oil production in line with an agreement through Opoec+, while non-oil growth is expected to remain robust,” the IMF said previously in a report.