Saudi Arabia’s Non-Oil Sector Grows in Q3
Economic data released on Tuesday revealed that Saudi Arabia’s non-oil sector experienced a 3.6 percent expansion in the third quarter of 2023 compared to the same period in the previous year. The General Authority for Statistics reported that government activities also grew by 1.9 percent during the same three-month period.
In contrast, oil-related activities declined significantly by 17.3 percent annually during the third quarter, resulting in a 4.5 percent decrease in the Kingdom’s seasonally adjusted real gross domestic product (GDP). The report by GASTAT further noted that the non-oil activities in Saudi Arabia increased by 0.1 percent in the three months ending in September 2023 when compared to the previous quarter.
On the other hand, oil activities faced an 8.4 percent decline in the third quarter compared to the previous three months, while government affairs experienced a 5.3 percent drop during the same timeframe.
Saudi Arabia had previously announced voluntary production cuts of 500,000 barrels per day in May, which were extended until December 2024. The Kingdom then introduced an additional voluntary cut of 1 million barrels per day in July, extending it until the end of the current year. These measures were taken to align with the objectives of the Organization of the Petroleum Exporting Countries (OPEC) and its allies, aiming to unify petroleum policies among member countries. The goal was to maintain fair and stable oil prices for producers and ensure a steady supply of crude oil to consumer nations.
Russia, the world’s second-largest oil exporter, has also extended its voluntary production cuts until the end of the year to support oil market stability, as announced by its deputy prime minister last month. Russia is committed to reducing its exports by 300,000 barrels per day during this period.
An October report from the International Monetary Fund (IMF) attributed the decrease in Saudi Arabia’s economic growth in 2023 to the intentional reduction in oil production. However, the IMF emphasized that ongoing investments in large-scale projects were expected to strengthen the growth of the non-oil GDP. These investments play a crucial role in diversifying the Saudi economy and reducing its reliance on oil-related revenues.
