[Christian Harris]

Saudi Arabia’s economic growth for the fourth quarter of 2024 was revised upward to 4.5% year-on-year, surpassing the preliminary estimate of 4.4%.

This acceleration marks the second consecutive quarter of growth and represents the fastest pace since the fourth quarter of 2022.

The expansion was driven by broad-based gains across all major economic sectors, reflecting the kingdom’s ongoing efforts to diversify its economy and reduce its reliance on oil revenues.

The oil sector, a cornerstone of Saudi Arabia’s economy, saw output grow by 3.4% in Q4, rebounding from stagnation in the previous quarter.

This recovery was supported by stable global oil prices and increased production levels.

Meanwhile, non-oil activities accelerated to 4.7% growth, up from 4.3% in Q3, highlighting the success of initiatives aimed at boosting sectors such as manufacturing, tourism, and technology.

Government activities also contributed positively, growing by 2.2%, albeit at a slower pace compared to the 3.1% expansion in Q3.

Breaking down the economic sectors, manufacturing output surged to 7.6%, up significantly from 1.6% in the previous quarter, driven by increased industrial production and investments in infrastructure.

Similarly, the electricity, gas, and water sector expanded by 7.4%, compared to 1.7% in Q3, reflecting higher demand and improved efficiency in utilities.

On the expenditure side, exports rose by 5.2%, up from 3.0% in Q3, supported by higher oil shipments and increased demand for non-oil goods.

Imports also grew sharply, increasing by 11.5% compared to 7.3% in the previous quarter, indicating robust domestic demand for foreign goods and services.

Household spending remained steady, growing by 3.9%, reflecting improved consumer confidence and disposable income.

However, fixed investment and government spending declined by 2.2% and 6.6%, respectively, signalling a shift in fiscal priorities and reduced public expenditure.

On a seasonally adjusted quarterly basis, GDP advanced by 0.5%, down from the 0.9% gain in Q3, suggesting a slight moderation in growth momentum.

For the full year of 2024, Saudi Arabia’s economy expanded by 1.3%, rebounding from a 0.8% contraction in 2023.

This recovery underscores the kingdom’s resilience in navigating global economic challenges and its progress in implementing structural reforms under its Vision 2030 agenda.

The upward revision of Q4 growth reflects Saudi Arabia’s ability to capitalise on favourable external conditions while advancing its diversification goals.

The strong performance of non-oil sectors, coupled with a rebound in oil output, highlights the economy’s evolving dynamics.

However, the decline in fixed investment and government spending raises questions about the sustainability of growth in the medium term, particularly as the kingdom continues to balance fiscal discipline with its ambitious development agenda.

Source: Trading Economics

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