Saudi economy sees fastest growth in decade on higher oil output

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Saudi economy sees fastest growth in decade on higher oil output

The higher oil production by Saudi Arabia and other OPEC+ states was to offset Russian output losses.

General view of Saudi Aramco's Ras Tanura oil refinery and oil terminal in Saudi Arabia is seen
High global oil prices have bolstered Saudi Arabia’s economy [File: Ahmed Jadallah/Reuters]

Published On 7 Jun 20227 Jun 2022

Saudi Arabia’s gross domestic product grew 9.9 percent in the first quarter, the fastest in a decade and more than a flash estimate last month of 9.6 percent, official data shows.

It was the fastest expansion since the third quarter of 2011 with the increase in oil production a key factor, said Monica Malik, chief economist at Abu Dhabi Commercial Bank.

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“This growth is due to the high increase in oil activities by 20.3 percent,” the General Authority for Statistics said.

GDP growth was 2.6 percent higher than in the fourth quarter on a seasonally adjusted basis, while oil activity was up 2.9 percent on a quarterly basis, data released on Tuesday showed.

Crude petroleum and natural gas activities were the highest contributor to GDP at 32.4 percent, the statistics authority said.

Non-oil activity rose 3.7 percent, or 0.9 percent from the previous quarter. Government activity increased by 2.4 percent year on year, but declined 0.9 percent from the fourth quarter.

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“All economic activities recorded positive annual growth rates in the first quarter of 2022,” the General Authority for Statistics said.

Wholesale and retail trade, restaurants and hotels activities grew by 6.3 percent from a year earlier, while exports grew by 22.1 percent, the data showed.

GDP per capita of 26,961 riyals ($7,187) in the first quarter of 2022 was up 33.8 percent from the corresponding 2021 quarter.

“The underlying data still points to a healthy pace of expansion in the non-oil sector,” Malik said adding, “Saudi is in a very strong position, given the limited global oil capacity and the high oil prices.”

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Saudi Arabia and other OPEC+ states agreed to bring forward oil production rises to offset Russian output losses as a result of Western sanctions for Moscow’s invasion of Ukraine, which it calls a “special military operation”.

In April, the International Monetary Fund upgraded the kingdom’s economic growth outlook to 7.6 percent in 2022, citing higher oil output and prices, from 3.2 percent in 2021.

SOURCE: REUTERS


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