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Friday, Aug 12, 2022

Saudi Q2 GDP grows at fastest pace in 11 years driven by oil sector

Saudi Q2 GDP grows at fastest pace in 11 years driven by oil sector

The Saudi oil sector grew 23.1 percent year-on-year in the second quarter of 2022, fueling an 11.8 percent growth in its real gross domestic product, according to flash estimates by the General Authority for Statistics.
This year-on-year growth was the fastest rate recorded since the third quarter of 2011 when it saw a 13.6 percent increase, according to data compiled by Arab News.

The flash estimates recorded a 20.4 percent annual rise in its oil sector last quarter.

Furthermore, the country saw a 7 percent year-on-year drop in oil activity in the same quarter of 2021, and a 5.3 percent drop the year before.

Real GDP increased by 9.9 percent in the first quarter of 2022, according to the GASTAT data.

The Kingdom’s non-oil activity grew by 5.4 percent year-on-year in the second quarter of this year, whereas government services activities grew 2.2 percent annually, compared to a 2.4 yearly percent increase in the first quarter.

Non-oil activity flourished in the second quarter of 2021, increasing by 11.1 percent annually. As for the year prior, it recorded a 10.6 percent fall.

Government activity saw an upward trend over the past two years. In the same quarter of 2021, it rose by 0.7 percent, whereas a year before it fell by 1.6 percent.

The quarterly rise in Saudi’s seasonally adjusted GDP reached 1.8 percent in the second quarter of 2022, which was driven by a 4.8 percent growth in oil activities and a 0.2 percent growth in government services, whereas non-oil sector activity fell by 0.4 percent this quarter.

Global economic changes and inflated oil prices are said to prolong this advancement and promote future growth in the region.

“Higher energy production and prices will result in all Gulf economies running twin budget and current account surpluses this year, providing scope for more fiscal support,” explained a note by Capital Economics.

Non-oil GDP is also expected to support future economic growth, as the Saudi government announced relief packages as part of their plan to gradually shift toward looser fiscal policies.

The Kingdom’s expected GDP growth is expected to rise above current expectations. This year it is expected to reach 10 percent, while next year it should grow by approximately 5.3 percent.

“Saudi Arabia’s economic recovery is likely to be one of the strongest in the emerging world over the next couple of years, as oil output is ramped up and fiscal policy is loosened,” said the report.

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