Saudi GDP grows 1.3% in 2024, buoyed by non-oil activities

Saudi Arabia’s economy rebounded in 2024, with real GDP growing 1.3% y-o-y, after contracting 0.8% in 2023 on the back of oil production cuts and lower crude prices, according to flash estimates (pdf) released by the General Authority of Statistics (Gastat).

The full-year growth figure is an uptick from the Finance Ministry’s 0.8% growth forecast, after revising down its initial forecast of 4.4%. The Kingdom’s GDP growth for 2024 was also higher than the World Bank’s revised estimate of 1.1% in December, and only 0.1 percentage point lower than the IMF’s recently revised 1.4% clip.

Driving the growth: A 4.3% expansion in non-oil activities and a 2.6% increase in government activities spurred the growth. Oil activities, on the other hand, shrank 4.5%.

EXPANSION SUSTAINED IN 4Q-

GDP grew by 4.4% y-o-y in 4Q last year, marking the highest growth rate in two years, according to Gastat, driven primarily by a 4.6% y-o-y increase in non-oil activities. Meanwhile, oil activities grew 3.4% y-o-y, while government activities grew 2.2% y-o-y.

REMEMBER- Real GDP grew 2.8% y-o-y in 3Q, snapping a four-quarter downward trend.

Pundits weigh in: The oil sector’s strength in 4Q “is surprising given the extension of Opec+ cuts until April,” Goldman Sachs Group’s MENA Economist Farouk Soussa told Bloomberg. Sousa flagged “a high level of Vision 2030-related investment and socio-economic reforms” as key drivers for non-oil growth.

On a quarterly basis: Seasonally adjusted real GDP was up 0.3% q-o-q in 4Q, supported by an increase of 1.3% in non-oil activities and a 0.6% increase in government activities by 0.6%. Meanwhile, quarterly growth was partly offset by a 1.5% drop in oil activities on the back of the Kingdom’s decision, along with the rest of Opec+, to extend existing oil output cuts until the end of 1Q 2025.

Data breakdown: The 1.3% q-o-q growth acceleration in 4Q’s non-oil economy, up from 0.7% in 3Q, is “in tune with the low level activity data,” Capital Economics MENA Economist James Swanston wrote in a note seen by EnterpriseAM Saudi. “Private sector credit lending growth strengthened in October and November,” Swanston said, adding that “while the PMI survey fell back in December, it was still the second highest reading of the year.”

LOOKING AHEAD-

Growth set to gain momentum in the medium-term: The IMF and the World Bank have recently slashed the Kingdom’s 2025 growth projections to 3.2% and 3.4% respectively, citing extended Opec+ production cuts. “We think GDP growth will accelerate this year as oil output cuts are unwound, but activity in the non-oil sector is likely to soften on the back of a turn to fiscal consolidation,” Swanston said, noting that Capital Economics expects the Saudi economy to grow 3.5% in 2025.

Driving growth in 2026: The World Bank upgraded its growth forecast for the economy of the world's biggest crude exporter to 5.4%, up from its previous forecast of 3.2%, as it expects “robust activity in the non-oil sector — especially in services — as well as higher oil production and exports,” the bank said in its latest Global Economic Prospects report. Meanwhile, the IMF penciled in a 4.1% growth clip in 2026, a downward revision of 0.3 percentage points.