KSA: Saudi Arabia’s non-oil activities saw a 3.5% increase in the third quarter of 2023 compared to the same period last year. This positive trend is in line with the Kingdom’s commitment to diversify its economy away from oil dependence. Official data released by the General Authority for Statistics (GASTAT) highlights the strategic importance of strengthening the non-oil private sector as the nation charts a course toward economic diversification.
While the overall real gross domestic product (GDP) witnessed a contraction of 4.4% year-on-year in Q3, and a 3.2% dip compared to the previous quarter, the driving force behind this decline lies in a deliberate 17% reduction in oil activities. Aligned with the Organization of the Petroleum Exporting Countries (OPEC), Saudi Arabia committed to a substantial 500,000 barrels per day output cut, initiated in April and extended until December 2024. This reduction was further compounded by an additional 1 million bpd cut announced in July, extending through December 2023, as confirmed by the Ministry of Energy in November.
Additionally, government activities, constituting the second-highest contributor to real GDP at 15.3%, experienced a positive growth of 1.9% in the third quarter compared to the same period last year. However, a more refined outlook emerges when considering a 3.8% decline in government activities during Q3 compared to the preceding quarter of this year.
Sectorial Dynamics
The GASTAT report highlights encouraging growth rates in various economic activities during the third quarter. Community, social, and personal services activities surged impressively, boasting an 11.8% year-on-year growth. Similarly, finance, insurance, and business services demonstrated a commendable increase of 6.2%. The wholesale and retail trade, along with restaurants and hotel activities, also contributed to the positive economic narrative with a notable rise of 5.4% during the same period.
Despite the reduction in the overall GDP attributed to deliberate cuts in oil production, Saudi Arabia’s non-oil sector remains a beacon of economic strength. As Saudi Arabia navigates the challenges posed by the evolving energy landscape, the positive trajectory in the non-oil sector serves as proof of the efficacy of Vision 2030 and the nation’s strategic economic vision.
