Saudi GDP shrinks 0.3% in 2Q 2024

The Kingdom's real GDP shrank 0.3% y-o-y in 2Q 2024, marking the fourth consecutive quarter of contraction, according to the latest revised estimates by the General Authority of Statistics (Gastat). The decline was driven by an 8.9% y-o-y decrease in oil activities. Oil activity accounts for c.40% of GDP and about 75% of government revenues.

Non-oil activity was up 4.9% y-o-y, while government activity also increased 3.6% y-o-y during the quarter.

REMEMBER- The Kingdom cut oil production by 500k barrels per day (bbl / d) in April 2023 in a bid to arrest falling oil prices, before revising production cuts to 1 mn bbl / d in June. Though originally seen ending in December 2023, the government extended the 1 mn bbl / d cut through 1Q 2024 and now seems poised to continue it through June 2024, maintaining production at 9 mn bpd. OPEC+ also shelved a planned 180k bbl / d output hike set for next month earlier this week as oil prices hit their lowest in a year.

On a quarterly basis: Real GDP grew by 1.4% when compared to the previous quarter, on the back of a boost to government activities (up 2.3% q-o-q) and non-oil activities (up 2.1% q-o-q). Oil activities also saw a modest recovery, rising 0.9% q-o-q.

SOUND SMART- Gastat’s most recent real GDP growth rate estimates were calculated using the chain-linking method, which provides a more accurate and flexible approach to the previously used fixed-base year method.