July 31, 2023 (MLN): Saudi Arabia’s gross domestic product rose 1.1% YoY as compared to 3.8% YoY in the previous quarter and 11% YoY in the same period last year, the latest preliminary data released by the General Authority for Statistics showed.
This was owed to a drop in oil prices, with oil GDP falling by 4.2% YoY, and the government’s decision to cut production, pushing the country from being one of the fastest-expanding major economies to one of the slowest.
It is worth noting that the GDP of 11% YoY in SPLY was due to Russia’s invasion of Ukraine, which sent crude to above $100 a barrel.
The trend may continue over the rest of 2023, according to Standard Chartered Plc, as Riyadh seeks to keep supplies in check to prop up prices, with Brent now around $85, as Bloomberg reported.
The world’s biggest crude exporter has reduced production since September, when it pumped 11 million barrels a day, to 9m for this month.
“The oil-sector contraction is likely to deepen much further in the third quarter,” said Carla Slim, an economist based in Dubai with Standard Chartered.
The non-oil sector, where most Saudis are employed and in which the government is investing tens of billions of dollars, was more buoyant, growing 5.5% between April and June.
This month, the kingdom got the largest downgrade among major economies from the International Monetary Fund. The Washington-based lender cut the kingdom’s growth outlook for 2023 to 1.9%, a downward revision of 1.2 percentage points.
Economic growth reached nearly 9% last year, the fastest in the Group of 20, driven by record crude output and Russia’s war on Ukraine roiling energy markets. That helped Saudi Arabia’s GDP surpass $1 trillion for the first time.
