Saudi Arabia’s quarterly GDP increases at its fastest pace in nine years

Saudi Arabia’s economy grew an annual 6.8 per cent in the third quarter, the fastest pace since 2012, as the world’s biggest oil exporter benefited from higher crude prices.

Seasonally adjusted quarterly real gross domestic product grew 5.8 per cent quarter-on-quarter in the Arab world’s largest economy, according to the kingdom’s General Authority for Statistics.

“This increase in GDP was a result of high growth in oil activities by 12.9 per cent. Non-oil activities increased by 1.6 per cent and government activities recorded a growth of 1.4 per cent,” the government agency said.

Saudi Arabia’s economy is expected to grow by 2.4 per cent this year and by 4.8 per cent in 2022, thanks to the country’s swift and effective response to the coronavirus pandemic and growth in the non-oil sector, the International Monetary Fund said in July.

Saudi Arabia’s IHS Markit Purchasing Managers’ Index was 57.7 in October, the second-highest reading recorded since the start of the pandemic.

Despite slipping from 58.6 registered in September, it underlined a sharp improvement in business conditions. A reading above 50 indicates economic expansion, while anything below points to a contraction.

The kingdom’s non-oil economy is projected to grow 4.3 per cent this year, according to the IMF.

Oil prices that are at multiyear highs and gained more than 60 per cent since the start of the year have helped to shore up finances.

The country recorded a budget surplus of 6.7 billion Saudi riyals ($1.8bn) during the third quarter, earning 243.3bn riyals in revenues, its first since 2019.

Oil revenues soared 60 per cent annually to 147.9bn riyals, the ministry said.

Meanwhile, non-oil revenues were up 33 per cent to 299.5bn riyals this year, while oil revenues surged by 25 per cent. Non-oil PMI continued to grow in October as it touched 57.7, the second-highest reading recorded since the start of the pandemic.

Oil-exporting countries are expected to have large surpluses this year and next amid rising crude revenues, according to a report by the Institute of International Finance.

“Net hydrocarbon exports and hydrocarbon government revenues account for more than half of total exports and total government revenues, respectively in major oil exporters,” the IIF said.

“Consequently, the fiscal deficits of 2020 will shift to large surpluses in 2021 and 2022 in most oil exporters, except in Nigeria, Kazakhstan and Algeria.”