Saudi Arabia has entered a recession, a report from Capital Economics said, as oil production cuts designed to prop up prices hurt the Kingdom’s bottom line – but the Kingdom’s non-oil economy continued to grow at a robust pace.
The data from Capital Economics is confirmed by Saudi Arabia’s General Authority for statistics (GASTAT), which released the GDP Flash Estimates Publication for the second quarter of 2023 earlier this week.
According to the publication, real GDP increased by (1.1%) during the second quarter of 2023 compared to the same period of last year 2022. The publication showed that non-oil economy grew by 5.5% in the second quarter of 2023 compared to the same period of last year 2022.
However, oil activities decreased by (4.2%) compared to the same period of last year.
“The results also demonstrated that the seasonally adjusted real GDP declined by (0.1%) during the second quarter of 2023, compared to the first quarter of the same year,” GASTAT said.
With oil cuts likely to continue, the Saudi economy is likely to experience a contraction for the entire year, the report said, and could result in the worst GDP performance in over two decades for the Kingdom, excluding the impact of the global financial crisis and the pandemic.
The strength of the non-oil economy is a positive sign for the Kingdom as it seeks to make its economy less reliant on oil with its Vision 2030 economic and social diversification push.
