Saudi Arabia’s real gross domestic product (GDP) shrank 0.4 per cent year-on-year in the second quarter, preliminary data by the government’s statistical authority showed on Wednesday, driven by a 8.5 per cent decline in oil activities which has limited overall growth for several quarters.
GDP had decreased 1.7 per cent in the first quarter of 2024, as cuts to oil production have continued to weigh on the major oil exporter’s economy.
Non oil activities increased by 4.4 per cent in the second quarter compared to the prior year period while government activities grew 3.6 per cent, the General Authority for Statistics data showed.
GDP growth remained unchanged at 1.4 per cent in Q2 on a seasonally adjusted quarterly basis from the first quarter, supported by a rise in government activities of 3.2 per cent, and both oil and non oil activity growth.
Saudi Arabia, the world’s top oil exporter, is in the midst of a massive economic overhaul known as Vision 2030 aimed at ending its reliance on oil requiring hundreds of billions in investment to develop new economic sectors and more sustainable revenue streams.
But economic growth is expected to be among the slowest in the six member Gulf Cooperation Council (GCC) this year, weighed lower by extended oil output cuts, according to a recent Reuters poll.
Lower oil revenues were likely to constrain investment in non-oil sectors this year, affecting overall economic expansion, economists say.
Earlier this month, the International Monetary Fund (IMF) cut Saudi Arabia’s GDP forecast to 1.7 per cent for this year, down 0.9 percentage points from its April projection. The Fund said in April the kingdom would require oil prices at almost $100 to balance its 2024 budget.
