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Saudi Non-Oil Sector Grows 4.9% in Q2, Exceeding Estimates

Data from the General Authority for Statistics (GASTAT) show a 0.3% contraction in real GDP in the second quarter (Asharq Al-Awsat)
Data from the General Authority for Statistics (GASTAT) show a 0.3% contraction in real GDP in the second quarter (Asharq Al-Awsat)
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Saudi Non-Oil Sector Grows 4.9% in Q2, Exceeding Estimates

Data from the General Authority for Statistics (GASTAT) show a 0.3% contraction in real GDP in the second quarter (Asharq Al-Awsat)
Data from the General Authority for Statistics (GASTAT) show a 0.3% contraction in real GDP in the second quarter (Asharq Al-Awsat)

Saudi Arabia's non-oil economy grew by 4.9% year-on-year in the second quarter of 2024, beating the July estimate of 4.4%.

According to the General Authority for Statistics (GASTAT), this is the highest growth rate in a year, up from 3.4% in the first quarter of 2024 and 4.2% and 3.2% in the last two quarters of 2023.

The IMF forecasts that Saudi Arabia’s non-oil GDP growth will stay strong.

Its latest report says that smart economic policies, transformative reforms, and increased investment have driven this growth, pushing employment above pre-COVID levels. Continuing these efforts is key to maintaining growth and diversifying the economy.

The IMF also predicts that reform momentum will rise in 2025 with more investment, especially from the Public Investment Fund, which plans to boost its annual investments from $40 billion to $70 billion.

This is in preparation for major events like the 2027 AFC Asian Cup, the 2029 Winter Asian Games, and Expo 2030. Full execution of the national investment strategy could push non-oil GDP growth to 8%.

Saudi authorities project non-oil growth to stay at 4% in 2024 and are confident that Vision 2030 will help sustain this growth long-term.

The General Authority for Statistics reported a 0.3% decline in real GDP in the second quarter of 2024 compared to the same period last year, better than the 0.4% drop expected.

Compared to the first quarter of 2024, seasonally adjusted real GDP grew by 1.4%. Non-oil sectors grew 4.9% year-on-year and 2.1% quarter-on-quarter.

Oil sector activity fell 8.9% year-on-year, slightly worse than the July estimate of 8.5%, but rose 0.9% quarter-on-quarter.

Government activities grew 3.6% year-on-year and 2.3% quarter-on-quarter.

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Draghi Urges Reform, Investment Drive to Revive Lagging EU

Italian former prime minister and economist Mario Draghi speaks during a press conference about the future of European competitiveness at the EU headquarters in Brussels on September 9, 2024. (Photo by Nicolas TUCAT / AFP)
Italian former prime minister and economist Mario Draghi speaks during a press conference about the future of European competitiveness at the EU headquarters in Brussels on September 9, 2024. (Photo by Nicolas TUCAT / AFP)
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Draghi Urges Reform, Investment Drive to Revive Lagging EU

Italian former prime minister and economist Mario Draghi speaks during a press conference about the future of European competitiveness at the EU headquarters in Brussels on September 9, 2024. (Photo by Nicolas TUCAT / AFP)
Italian former prime minister and economist Mario Draghi speaks during a press conference about the future of European competitiveness at the EU headquarters in Brussels on September 9, 2024. (Photo by Nicolas TUCAT / AFP)

The European Union needs far more coordinated industrial policy, more rapid decisions and massive investment if it wants to keep pace economically with rivals the United States and China, Mario Draghi said on Monday in a long awaited report.
The European Commission asked the former European Central Bank chief and Italian prime minister a year ago to write a report on how the EU should keep its greening and more digital economy competitive at a time of increased global friction.
"Europe is the most open economy in the world so when our partners don't play according to the rules, we are more vulnerable than others," Draghi told a news conference.
In the opening section of a report set to run to some 400 pages, Draghi said the bloc needed additional investment of 750-800 billion euros ($829-884 billion) per year, up to 5% of GDP - far higher even than the 1-2% in the Marshall Plan for rebuilding Europe after World War Two.
"Growth has been slowing down for a long time in Europe, but we've ignored (it)," Reuters quoted Draghi as saying.
"Now we cannot ignore it any longer. Now conditions have changed: World trade is slowing, China is actually slowing very much and is becoming much less open to us... we've lost our main supplier of cheap energy, Russia."
EU countries had already responded to the new realities, Draghi's report said, but it added that their effectiveness was limited by a lack of coordination.
Differing levels of subsidies between countries was disturbing the single market, fragmentation limited the scale required to compete on a global level, and the EU's decision-making process was complex and sluggish.
"It will require refocusing the work of the EU on the most pressing issues, ensuring efficient policy coordination behind common goals, and using existing governance procedures in a new way that allow member states who want to move faster to do so," the report said.
It suggested so-called qualified majority voting - where an absolute majority of member states need not be in favor - should be extended to more areas, and as a last resort that like-minded nations be allowed to go it alone on some projects.
While existing national or EU funding sources will cover some of the massive investment sums needed, Draghi said new sources of common funding - which countries led by Germany have in the past been reluctant to agree to - might be required.
"If the political and institutional conditions are met, these projects would also call for common funding," the report said, citing defense and energy grid investments as examples.
EU growth had been persistently slower than that of the United States in the past two decades and China was rapidly catching up. Much of the gap was down to lower productivity.
Draghi's report comes as doubts emerge over the economic model of Germany, once the EU's motor after Volkswagen weighs its first ever plant closures there.
Draghi said the EU was struggling to cope with higher energy prices after losing access to cheap Russian gas and could no longer rely on open foreign markets.
The former central banker said the bloc needed to boost innovation and bring down energy prices while continuing to decarbonize and both reduce its dependencies on others, notably China for essential minerals, and increase defense investment.