Saudi Arabia's GDP posted a 3.9% growth during Q1 2023, according to the latest results published by the government. As per the details, the growth arising from non-oil activities was recorded at 5.8% during Q1 when compared with data from 2022.
Similarly, the growth from oil activities was recorded at 1.3%. And if we look at the growth in government services activity, it was recorded at 4.9%.
However, the overall GDP growth during Q1 2023 remained slow when compared with the last quarter of 2022. During Q4 2022, Saudi Arabia's economy grew by 5.5% on a YoY basis.
As per the reports, the seasonally adjusted real GDP actually went down by 1.3% during Q1 2023. The reason for this decline can be attributed to the decline seen in the oil activities. Overall, the oil activities in the country went down by 4.8% during the same period of time.
GDP Forecast For 2023 Is 3.1%
According to the IMF, the GDP growth in Saudi Arabia was 8.7% during 2022. But for 2023, the IMF believes that it will be somewhere around 3.1% which is even less than half of what we saw in 2022.
In other news, Saudi Arabia has announced its plans to cut oil production by 500,000 bpd starting in May. This is part of the oil cuts announced by the OPEC+ countries.
This move could increase global oil prices but would also effect the country's revenue coming from oil exports. However, the one thing that sheds light on the changing dynamics of Saudi Arabia's economy is the growth from non-oil activities.
It appears that even Saudi Arabia now understands that it can't rely on oil revenue for the long-term. That's why the Saudi government is diversifying its economy and branching out to non-oil sectors.
But if we look at the 2023 forecast made by the IMF, it appears that 2023 will be a tough year for Saudi Arabia's economy as a whole.