Saudi GDP fell 1.8% y-o-y in the first quarter of the year, marking the third consecutive quarter that the economy has been in contraction, according to preliminary figures from state statistics agency Gastat (pdf). The downturn was again due to a 10.6% decline in oil activity, which accounts for c. 40% of GDP (and about 75% of government revenues).

Non-oil activity was up 2.8% y-o-y, with government activity also growing at a 2% clip.

REMEMBER- The Kingdom cut oil production by 500k barrels per day in April 2023 in a bid to arrest falling oil prices. That figure became a 1 mn bpd voluntary cut by June. Though originally seen ending in December 2023, the government extended the 1 mn bpd cut through 1Q 2024 and now seems poised to continue it through June 2024, maintaining production at 9 mn bpd.

On a quarterly basis: GDP climbed 1.3% compared to the previous quarter, driven primarily by a 2.4% increase in oil activity, as well as 0.5% growth in non-oil activities. Government activity slowed by 1% q-o-q.

There’s still time to catch up to gov’t targets: The Finance Ministry is targeting GDP growth of 4.4% for the current fiscal year, Finance Minister Mohamed Al Jadaan said in December. The IMF revised its 2024 growth forecast for the Kingdom to 2.6% last month, pointing to the combined effects of lower oil prices and production cuts.

Activity could pick up later this year: London-based research outfit Capital Economics sees the economy recovering throughout the year, saying in a research note seen by Mubasher that the preliminary estimate of the country’s GDP this quarter is a sign that it is emerging from a recession.

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