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Insights

Saudi Economy in 2024-25

Macroeconomic Report

Saudi Arabia’s non-oil economy continues to expand at a brisk pace. The authorities’ preliminary estimate puts non-oil GDP growth at 4.6 percent in 2023 and we see an acceleration to 5 percent-plus in the next two years. Growth will be driven by both consumption and investment, with net exports a drag—at least this year. Consumer price inflation should remain contained, though project cost overruns are likely.

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Macroeconomic update - December 2023: (Domestic demand remains strong)

Macroeconomic Report

Domestic demand in the Kingdom remains very strong, driven by a booming projects market and firm consumption growth. Following a comparatively soft patch in Q3, the non-oil economy is picking up pace again, thanks in part to an acceleration in central government spending. We expect non-oil GDP growth to reach 5.1 percent this year and 5.2 percent in 2024.

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Q2 2023 GDP Update: (Non-oil GDP growth accelerates in Q2-23)

Macroeconomic Report

‘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.

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Macroeconomic update - July 2023: (Raising our non-oil GDP forecast)

Macroeconomic Report

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.

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Q1 2023 GDP Update: (Non-oil GDP growth remains buoyant)

Macroeconomic Report

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.

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