The Saudi General Authority for Statistics (GASTAT) said on Wednesday that the Kingdom’s gross domestic product rose by 6.7 percent in the fourth quarter of 2021, while growth across the whole year increased by 3.2 percent, the highest jump achieved in nearly a decade.
The growth was to a large extent due to the high increase in oil activities, which grew by 10.9 percent year-on-year, according to the data issued by GASTAT.
Non-oil activities also increased strongly by 5.1 percent, while government activities expanded by 2.4 percent.
A recent report by Oxford Economics on economic development in the Middle East - which was commissioned by the Institute of Chartered Accountants in England and Wales (ICAEW) - expected Saudi Arabia to see a strong recovery pace in 2022, despite the spread of the Omicron variant and uncertainty over the Russian-Ukrainian conflict.
The higher oil prices combined with increased production and revised GDP data should keep the Kingdom on a high growth path over a decade and turn its fiscal deficit into a surplus after eight years, according to the report.
It added that the Saudi economy was recovering strongly from the Omicron wave, and grew by 6.7% in the last quarter of 2021, while production expanded by 3.3% last year. The report noted that GDP growth is expected to accelerate by 3.9% in 2022.
The report stated that with the escalation of OPEC + demands and the increase in oil supplies amid the uncertainty over the Russian-Ukrainian conflict, the oil sector would be the main engine for the growth of the Saudi economy, and would expand by 12.5% in 2022.
The Russian invasion led Western countries to impose severe sanctions on Moscow, the report emphasized, making Saudi Arabia the largest oil producer within the OPEC+, with production increasing to 10.1 million barrels per day last January, up from 9.1 million barrels per day in 2021.
The report expected production to grow to 10.5 million barrels per day in 2022, with the potential to rise further depending on the impact and continuation of the conflict in Ukraine.
With oil prices rising above $100 a barrel, the report indicated that Saudi Arabia should record a budget surplus of 7.3% of GDP this year, a radical improvement of $24 billion, representing 2.5% of the GDP expected in its 2022 budget, which set the price of oil at 65-75 dollars.
According to the report, it will be the first surplus in the Kingdom’s budget in eight years. However, oil gains are not expected to affect the Kingdom’s spending, as the surplus will be used to replenish the damaged reserves in 2020.
Meanwhile, non-oil revenues rose at a strong, albeit slower, pace, increasing by 5% year-on-year.
Despite the improvement in the conditions of the private sector, unemployment rate remains high, reaching 11.3% in the third quarter of 2021, with about half of the national workforce employed by the government.
However, the report noted a positive increase in female employment, a trend that is expected to continue further as sectors open up, including tourism and hospitality, and other ongoing mega projects.