‘Non-oil Activities’ real GDP growth accelerated to 6.1 percent, year-on-year, in Q2-23, pushing up the average for the past four quarters to 5.9 percent. Meanwhile, ‘Government Activities’, which is separate, eased back to 2.3 percent growth following a spike in Q1-23. Overall GDP growth was weighed down by cuts to oil production, and fell to 1.2 percent from 3.8 percent in Q1.
The Saudi domestic economy continues to grow robustly. Real non-oil GDP expanded by 5.4 percent in Q1-23, with Domestic Trade, Construction, and Transport leading the way. Available data for Q2 indicate that activity in these sectors continues at a brisk pace. Manufacturing was the only sector to record a year-on-year decline, with Refining contracting in the face of soft regional demand, and Petrochemicals exports to China struggling to gain traction. Nevertheless, Saudi domestic Manufacturing demand is strong and new factories continue to be rolled out. Thus, we raise our non-oil GDP growth forecast to 5.9 percent this year, with a similar rate of expansion anticipated for 2024.
GASTAT data show that the non-oil economy continues to expand at a robust rate. Real non-oil GDP grew by 5.3 percent in Q1, year-on-year, the third quarter running that this mark was achieved, and in line with the 2021-22 quarterly average.
Driven by sustained impulses from both investment and consumption, we expect Saudi Arabia’s non-oil economy to continue growing well in excess of 5 percent in 2023. Overall GDP growth is set to slow to 2.8 percent from last year’s world-leading 8.7 percent as oil production is reined in.
Recently published data of the Kingdom’s GDP by the General Authority for Statistics (GaStat) showed strong growth in both oil and non-oil activities in H1 2022. This combined with our expectation of continued growth in H2, has led us to upgrade our full year 2022 GDP forecast.