Saudi Arabia’s Economy Contracts in Q4, Oil Cuts Contribute to Decline

Saudi Arabia’s real GDP for the fourth quarter of the year witnessed a year-on-year contraction of 3.7%, as indicated by preliminary estimates released by the General Authority for Statistics on Wednesday. Although a decline, it is a smaller drop compared to the 4.4% year-on-year slide recorded in the third quarter.

The contraction in Q4 was primarily attributed to a 16.4% decline in oil-related activities. However, there was growth in non-oil activities, expanding by 4.3%, and government activities, which increased by 3.1% year-on-year.

For the entire year, Saudi Arabia’s economy experienced a contraction of 0.9%, according to official government data. Throughout the year, the country, being the world’s largest crude exporter, implemented output cuts with the aim of boosting oil prices. Additionally, Saudi Arabia took on a significant portion of voluntary crude production cuts agreed upon by certain members of the Organization of the Petroleum Exporting Countries (OPEC) and its allies.

Given that the petroleum sector contributes to 42% of Saudi Arabia’s GDP, the economic performance is closely tied to developments in the oil industry.

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