Saudi economy grows at fastest pace in a decade on rising oil activities

RIYADH: Saudi Arabia’s real Gross Domestic Product rose by 9.6 percent in the first three months of 2022 compared to the same period last year, according to flash estimates by the General Authority for Statistics, also known as GASTAT.

Real GDP in Saudi Arabia, the biggest oil producer in the Organization of the Petroleum Exporting Countries and the world’s largest oil exporter, was driven mostly by the Kingdom’s oil activities that increased by 20.4 percent from a year ago.

Non-oil activities and government services rose by 3.7 percent and 2.4 percent, respectively.

The increase in energy prices, which has been the largest since the 1973 oil crisis, together with the war in Ukraine — which altered the global patterns on trade, production and consumption — have contributed to this record GDP growth.

The Kingdom’s non-oil sector has also expanded at the fastest rate in over four years, according to the Saudi Arabia PMI survey.

This has been due to new business and activity that boosted sharply as client demand recovered after COVID-19.

The increase in business also came in line with Vision 2030 , a reform plan that aims to diversify the country’s economic resources.

According to quarterly data provided by GASTAT, GDP in Saudi Arabia grew by 2.2 percent in Q1 of 2022 compared to the previous quarter. Oil activities had a positive quarterly increase of 2.9 percent, non-oil activities by 2.5 percent, while government activities decreased by 0.9 percent.

According to the World Bank, energy prices are expected to rise more than 50 percent in 2022, before easing in 2023 and 2024.

A prolonged war in Ukraine and additional sanctions on Russia could drive prices even higher in the near future, however. Saudi Arabia therefore is one of few countries that will be able to ramp up its production capacity, influencing the country’s GDP even more.