Saudi Arabia’s gross domestic product (GDP) expanded by 1.1% in the second quarter, primarily driven by non-oil activities, marking a significant slowdown compared to the same period last year.
The Saudi economy surged by 8.7% in the previous year, ranking among the fastest-growing in the G20, buoyed by high oil prices that bolstered revenues and resulted in the Kingdom’s first budget surplus in nearly a decade.
However, growth prospects for the current year have been revised downward due to lower oil prices and the likelihood of prolonged oil production cuts.
In the second quarter, oil-related activities contracted by 4.2% year-on-year, exerting downward pressure on overall growth. Conversely, non-oil sectors expanded by 5.5%, as reported by the General Authority for Statistics.
Comparatively, real GDP growth in the same quarter of the previous year stood at 11.2%, largely due to a nearly 23% increase in oil-related activities.
The International Monetary Fund (IMF) recently adjusted its 2023 GDP growth forecast for the world’s leading oil exporter to 1.9%, reflecting the enduring effects of extended oil production cuts.
Saudi Arabia is expected to extend its voluntary 1 million barrels per day oil output reduction into September, further supporting the oil market. As of Monday, oil prices were poised to record their most significant monthly gain in over a year.