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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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IMF Report: Saudi Arabia Surpasses Vision 2030 Tourism Target

Fireworks light up the sky following the F1 Saudi Arabian Grand Prix in Jeddah in December 2021. (SPA file)
Fireworks light up the sky following the F1 Saudi Arabian Grand Prix in Jeddah in December 2021. (SPA file)
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IMF Report: Saudi Arabia Surpasses Vision 2030 Tourism Target

Fireworks light up the sky following the F1 Saudi Arabian Grand Prix in Jeddah in December 2021. (SPA file)
Fireworks light up the sky following the F1 Saudi Arabian Grand Prix in Jeddah in December 2021. (SPA file)

The International Monetary Fund (IMF) has highlighted Saudi Arabia’s tourism sector as a major contributor to the country’s economic diversification in its 2024 Article IV Consultation report.

The report acknowledged Saudi Arabia’s success in exceeding the Vision 2030 target of attracting 100 million visitors annually by 2023, seven years ahead of schedule.

Tourism revenues reached $36 billion in 2023, with net tourism income increasing by 38%. The sector’s direct and indirect contribution to GDP reached 11.5% in 2023, with expectations to grow to 16% by 2034.

Central to this growth has been a combination of strong domestic demand and increased international arrivals.

Non-religious tourism has surged, with increased leisure travel and visits to friends and relatives driven further by major international events such as Formula One, the 2027 Asian Cup, and the 2030 World Expo.

The IMF report underscored the role of tourism in shifting Saudi Arabia’s service balance to a surplus. This means that the Kingdom is now earning more from international visitors than it is spending on outbound tourism. By 2022, this shift resulted in a positive balance, and 2023 saw further gains through increased revenue from transportation and service exports.

The report also noted that while outbound tourism spending by Saudi nationals declined, and expatriates in the Kingdom significantly increased their leisure spending post-COVID.

Crucial to this transformation are the diverse linkages Saudi Arabia’s tourism sector has created across industries, such as food, beverage, travel, cultural industries, and accommodation. These connections are helping to reduce the Kingdom’s reliance on oil-intensive sectors.

Major giga projects like Red Sea Global and Diriyah Gate are pivotal in this shift, as they focus on luxury tourism, culture preservation, and infrastructure improvements.

Vision 2030 remains the Kingdom’s comprehensive economic reform plan, with tourism at its core. The IMF’s recognition of Saudi Arabia’s progress reflects the vast potential of its tourism sector and its capacity to drive sustainable economic growth in the years to come.