Saudi Arabia, the world biggest oil producer, grew slower in the first quarter of 2023 compared to the last quarter.
According to the latest Saudi government data, its economy grew by 3.9 percent in the first three months of 2023. In the preceding quarter (October-December 2022), the economy grew at 5.5 percent.
However, the government’s plan to diversify its predominantly oil-based economy has got a further boost. Non-oil activities grew by 5.8 percent in the first quarter of 2023 compared to last year. In the same period, oil activities grew only by 1.3 percent.
Saudi Arabia has been aiming to diversify its economy by reducing its focus on oil-related activities.
As part of Saudi Vision 2030, the country aims to diversify non-oil exports and increase its share in the non-oil GDP from 16 percent to 50 percent in 2030. Finance, insurance, other business services, transport and communication, non-oil manufacturing and agriculture will be key components of Saudi Arabia’s push for a non-oil economy.
The push for prioritising the non-oil sector is largely influenced by the volatile nature of oil as a commodity. Oil prices are prone to global economic and political volatility, as seen during the ongoing Ukraine war and global economic slowdown.
Meanwhile, Saudi Arabia also reported a deficit of $770 million in the first three months of 2023, as the government increased spending by nearly 30 percent, largely due to the expenditure on salaries and economic diversification projects.
However, higher non-oil revenues drove Saudi Arabia’s income in 2023. Non-oil revenues rose by 9 percent while oil revenues fell by 3 percent in the first three months of 2023 due to lower crude prices.
This is in contrast to last year, when surging oil prices boosted revenue for Saudi Arabia This also led to the its first budget surplus in almost 10 years.
The budget deficit is also reflective of the International Monetary Fund’s projection that the Saudi Arabian economy will grow at just 3.1 percent this year, down from 8.7 percent last year, as global crude oil prices remain below the $80 per barrel.
For all the latest business News Click Here
