According to initial government reports released today, the Kingdom of Saudi Arabia’s real GDP shrank 1.7% annually in the first quarter, indicating a sharp decline in the country’s oil production activities.
The oil economy shrank by 9% annually in 2023, according to a statement released by the Saudi General Authority for Statistics.
This is the third consecutive decline in the Kingdom’s economy, which has been impacted by the drop in oil production and the drop in crude prices. It is important to note that this decline in domestic product occurs as the decline in oil activities continues to put pressure on growth in Saudi Arabia generally.
It is noteworthy that, according to the authority’s estimates, Saudi Arabia’s gross domestic product fell by 3.7 percent in the fourth quarter of 2023, and that, on an annual basis, oil activities declined by 11.2 percent in the first quarter. In contrast, the gross domestic product from non-oil sources increased by 3.4 percent, and government activities increased by 2%. However, the authority’s data did not specify what non-oil activities accounted for the 3% increase; analysts believe this increase stems from Umrah and Hajj funds from previous months and the ongoing Hajj season. The authority did not respond to a request for comment.
In 2023, the gross domestic product of Saudi Arabia was valued at approximately 4.003 trillion Saudi riyals ($1.07 trillion). The largest portion of this was derived from the production of crude oil and natural gas, accounting for 25.4% of the total. The remaining percentage was allocated to the government services sector, trade wholesale and retail, restaurants and hotels, manufacturing industries, real estate activities, and tax collections.
In the same context, analysts noted that the drop in the price of oil to an average of $82 from $98 in 2022 was the reason behind the decline in the Saudi economy over the previous year.
The Kingdom of Saudi Arabia announced in July 2023 that it would offer a one million barrel per day voluntary reduction in oil production, and that this reduction would last until the end of the first half of 2024.
According to studies conducted over the past year, Saudi Arabia’s per capita GDP decreased by 8.5 percent from 2022 to 118.2 thousand riyals ($31.5 thousand) in 2023. The analysts attribute the rising rates of poverty and unemployment to the corruption within MBS’s regime, inadequate planning and management, and the misappropriation of funds for imaginary projects in a desert that has not yielded substantial economic benefits for the Kingdom for the past eight years, despite all these estimates.
