Saudi Arabia’s economy expanded at a slower pace in the first quarter of 2023 as the oil sector grew at its lowest rate in more than a year.
(Bloomberg) — Saudi Arabia’s economy expanded at a slower pace in the first quarter of 2023 as the oil sector grew at its lowest rate in more than a year.
Gross domestic product grew an annual 3.9% in the opening three months of the year, according to preliminary data released by the General Authority for Statistics. That compares with 5.5% in the previous quarter.
Economic expansion was driven by a 5.8% increase in non-oil activities, the engine of job creation, the data showed Sunday. Oil activities’ growth was 1.3%, compared with 6.1% the previous quarter.
The International Monetary Fund expects the Saudi economy to grow 3.1% this year, a significant slowdown from the 8.7% it recorded in 2022. The IMF has warned that Saudi Arabia won’t be able to balance its budget this year if average oil prices are below $80 a barrel.
The country’s de facto ruler, Crown Prince Mohammed bin Salman, is halfway through his multi-trillion-dollar vision to transform and diversify the economy of the world’s largest crude exporter, under a plan known as Vision 2030. In addition to jump-starting non-oil sectors like tourism, the country wants to boost the private sector’s share of the economy to 65% from the low 40s.
Much of this ambition hinges on Saudi Arabia’s ability to attract foreign investments, which has so far not met expectations. That’s contributing to many analysts increasing their forecasts of the oil price the kingdom needs to balance its budget while continuing to spend on Vision 2030-related expenditures and projects.
–With assistance from Mirette Magdy.
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