Celebrating this year’s National Day was somewhat different from previous years, particularly in terms of the economy. Despite a 4.3 percent annual decrease in oil activities, Saudi Arabia’s real gross domestic product still grew by 1.2 percent in the second quarter of this year.
Non-oil activities in Saudi Arabia experienced a significant increase of 6.1 percent, while government activities grew by 2.3 percent. These figures reflect the successful economic diversification efforts pursued by the Saudi government to enhance the contribution of non-oil activities to the country’s GDP, which aligns with the goals outlined in Saudi Vision 2030.
In the second quarter of 2023, the GDP at current prices in Saudi Arabia amounted to SR970 billion ($258.7 billion). This growth was primarily driven by the contribution of crude oil and natural gas activities, which accounted for 25 percent of the GDP.
A recent report released by the International Monetary Fund, based on Article IV consultation with Saudi Arabia, applauded the Kingdom’s economic performance. It was noted that Saudi Arabia had the fastest-growing economy among the G20 countries, with a growth rate of 8.7 percent in 2022. This growth was attributed to a 16 percent increase in crude oil production and a 4.8 percent increase in non-oil GDP.
The IMF also acknowledged the rapid economic transformation driven by the Saudi Vision 2030 reform agenda, achieved despite the challenges posed by the COVID-19 pandemic and the reduction in the oil sector’s contribution to revenue, exports, and output.
While many countries around the world are still grappling with the economic impact of the COVID-19 pandemic and facing challenges such as poor economic performance and high inflation levels, Saudi Arabia’s efforts in economic reforms and sustainable development have positioned it favorably.
According to the World Competitiveness Yearbook 2023, published by the World Competitiveness Center of the International Institute for Management Development, Saudi Arabia has been ranked 17th globally in terms of overall performance. This ranking includes 64 countries considered to be the most competitive in the world.
In addition to its global ranking, Saudi Arabia has also been ranked as the third most competitive economy among its G20 counterparts.
A recent rating released by credit rating agency S&P has confirmed Saudi Arabia’s credit rating in both local and foreign currencies as “A/A-1” with a stable outlook.
The agency based its strong credit rating of Saudi Arabia on the Kingdom’s notable efforts to continue its economic reforms in recent years. These reforms have led to structural improvements that have supported the sustainable development of the non-oil sector.
The agency also affirmed that Saudi Arabia’s efforts to manage public finances and maintain a balanced level of public debt have contributed to the credit rating.
S&P expects that Saudi Arabia’s growth will increase at a rate of 3.4 percent during the years 2024-2026. This projection is based on an anticipated increase in the number of orders for oil, as well as significant growth in the non-oil sector.
Indeed, with these outstanding and impressive economic achievements, Saudis have reasons to celebrate the 93rd National Day of the Kingdom with happiness and pride. While many countries around the world are still grappling with the economic impact of the COVID-19 pandemic and facing challenges such as poor economic performance and high inflation levels, Saudi Arabia’s efforts in economic reforms and sustainable development have positioned it favorably.
Thanks to the Kingdom’s leadership and ambitious Vision 2030, its economy is now among the best-ranked in the world.
• Talat Zaki Hafiz is an economist and financial analyst. X: @TalatHafiz