Saudi Gazette report
RIYADH — Saudi Arabia’s non-oil sector recorded a growth rate of 3.6 percent in the third quarter of 2023, despite its decline in the second quarter of the year, according to the latest figures released by the General Authority for Statistics (GASTAT) on Tuesday.
This figure reflects the continued success of the policy of diversifying sources of income away from oil, which is one of the most prominent goals of the Saudi Vision 2030. The oil-related activities recorded a decline of 17.3 percent annually during the third quarter of 2023, leading to a 4.5 percent fall in the Kingdom’s seasonally adjusted real GDP during the third quarter.
The Kingdom’s non-oil activities increased by 0.1 percent in the third quarter compared to the previous quarter, in addition to the growth of government activities by 1.9 percent.
The gross domestic product (GDP) reached 1.2 percent in the second quarter of this year. This was the first time that the Saudi economy has contracted since the first quarter of 2021.
The seasonally adjusted GDP decreased by 3.9 percent in the third quarter of this year compared to the second quarter, affected by a decrease in oil activities by 8.4 percent, in addition to a decrease in government activities by 5.3 percent, while non-oil activities achieved an increase of 0.1 percent on the quarterly basis.
The growth of the non-oil economy in Saudi Arabia at a rate of 6.1 percent during the second quarter of 2023 led the Kingdom to raise its estimates of GDP growth to 1.2 percent in the second quarter from 1.1 percent in previous preliminary estimates.
Saudi Finance Minister Mohammed Al-Jadaan said last week that the Kingdom is no longer focusing on gross domestic product numbers, but rather on the development of the non-oil sector, in light of its goal to diversify the economy in accordance with the Vision 2030. He expected that the non-oil GDP will end the current year with growth of about 6 percent. The minister stressed that the growth of non-oil GDP in the Kingdom continued in a “healthy” manner, and is likely to continue as such in the medium term.
The latest forecasts of the Saudi Ministry of Finance indicated in the preliminary statement of the 2024 budget that non-oil activities will grow at a rate of 5.9 percent during the current year, at a time when the ministry reduced its expectations for economic growth to 0.03 percent from 3.1 percent, which it attributed mainly to the voluntary reduction of the Kingdom’s oil production.
Crown Prince and Prime Minister Mohammed bin Salman, in his interview last September with the American Fox News channel, noted the development of the non-oil sector’s contribution to the Kingdom’s GDP, which helped the Saudi economy achieve the highest growth rate in 2022 among the countries of the G20 group, and this sector recorded the second highest growth rate in 2023 within the group as well. He said that this constitutes a competition between us and India, while describing it as a good competition.”
The International Monetary Fund recently praised the reforms implemented by the Kingdom within the framework of Vision 2030, noting that the growth momentum in the non-oil sector continues despite the decline in overall growth in general in light of the increase in investments and the acceleration of reforms. The IMF also expected that the non-oil economic sectors in Saudi Arabia would maintain a strong growth rate of up to 4.9 percent during 2023, supported by domestic consumption, regardless of the decline in oil production