Saudi Arabia Set to Become World’s Fastest-Growing Major Economy in 2023

The Saudi economy is witnessing rapid growth, according to reports issued by international agencies (Asharq Al-Awsat)
The Saudi economy is witnessing rapid growth, according to reports issued by international agencies (Asharq Al-Awsat)
TT

Saudi Arabia Set to Become World’s Fastest-Growing Major Economy in 2023

The Saudi economy is witnessing rapid growth, according to reports issued by international agencies (Asharq Al-Awsat)
The Saudi economy is witnessing rapid growth, according to reports issued by international agencies (Asharq Al-Awsat)

Saudi Arabia is set to overtake India as the fastest-growing major economy in 2023 after the latter lost growth due to weak demand at home and abroad.

The Kingdom’s real gross domestic product grew by 8.8 % in the third quarter of 2022 compared to the same period in 2021, driven by an increase in oil activities, according to a report released by the General Authority for Statistics (GASTAT).

According to Bloomberg, Saudi Arabia is expected to outpace India with 7.6% gross domestic product growth in 2023.

This follows a 6.8% expansion forecast by the Reserve Bank of India, made by the end of March 2022.

Last December, the Saudi Cabinet approved the state’s general budget for the fiscal year 2023.

The budget covers total spending at SAR 1.114 trillion ($297 billion) and expects revenues estimated at SAR 1.130 trillion ($301 billion), producing a surplus of 16 billion riyals ($4.2 billion).

According to a report by the GASTAT, oil activities in the third quarter increased 14.2 percent year-on-year, and 4.5 percent quarter-on-quarter.

The report further pointed out that non-oil activities in the Kingdom also grew 6 % year-on-year.

Government activities also rose by 2.5 % in the third quarter compared to the same period a year ago.

GASTAT's report further noted that crude petroleum and natural gas grew by 14.8 % year-on-year, thus contributing 35.2 % to the national GDP.

“The non-oil economic activities outside the government contributed with a share of 50.7 % to GDP, with the manufacturing (excluding petroleum refining) with a share of 7.8 % being the most important sub-category within the non-oil economy,” the report said.

According to GASTAT, Saudi GDP at current prices amounted to SAR 1.036 trillion in the third quarter of 2022.

By generating 35.2% of Saudi GDP, crude oil and natural gas activities achieved the highest contribution among all other economic activities. This was followed by government services at 14.1%.



Oil Slips from Recent Highs as Market Assesses Middle East Tension

A pump jack operates near a gas turbine power plant in the Permian Basin oil field outside of Odessa, Texas, US February 18, 2025. REUTERS/Eli Hartman/File Photo
A pump jack operates near a gas turbine power plant in the Permian Basin oil field outside of Odessa, Texas, US February 18, 2025. REUTERS/Eli Hartman/File Photo
TT

Oil Slips from Recent Highs as Market Assesses Middle East Tension

A pump jack operates near a gas turbine power plant in the Permian Basin oil field outside of Odessa, Texas, US February 18, 2025. REUTERS/Eli Hartman/File Photo
A pump jack operates near a gas turbine power plant in the Permian Basin oil field outside of Odessa, Texas, US February 18, 2025. REUTERS/Eli Hartman/File Photo

Oil prices fell on Thursday after sharp gains in the previous session as market participants assessed a US decision to move personnel from the Middle East ahead of talks with Iran over the latter's nuclear-related activity.

Brent crude futures were down $1.31, or 1.9%, at $68.46 a barrel at 1202 GMT, while US West Texas Intermediate crude was $1.32, or 2%, lower at $66.83 a barrel, Reuters reported.

A day earlier both Brent and WTI surged more than 4% to their highest since early April.

US President Donald Trump said the US was moving personnel because the Middle East "could be a dangerous place". He also said the US would not allow Iran to have a nuclear weapon. Iran has said its nuclear activity is peaceful.

Increased tension with Iran has raised the prospect of disruption to oil supplies. The sides are set to meet on Sunday.

"Geopolitical risk premia tend to fade if there are no supply disruptions. We are still higher than two days ago as some short investors prefer to stay on the sidelines amid the uncertainty," UBS analyst Giovanni Staunovo said.

On Wednesday Britain's maritime agency warned that increased tensions in the Middle East may lead to an escalation in military activity that could impact shipping in critical waterways.

It advised vessels to use caution while travelling through the Gulf, the Gulf of Oman and the Straits of Hormuz, which all border Iran.

"For the oil market, the absolute nightmare is a closure of the Strait of Hormuz," Global Risk Management analyst Arne Rasmussen said in a LinkedIn post.

"If Iran blocks this narrow chokepoint, it could affect up to 20% of global oil flows," he added.

JPMorgan said oil prices could surge to $120-$130 a barrel if the strait were to be shut, a scenario the bank considered to be severe but low-risk.

The US meanwhile is preparing a partial evacuation of its Iraqi embassy and will allow military dependents to leave locations in the Middle East due to heightened security risk in the region, Reuters reported on Wednesday citing US and Iraqi sources.

Iraq is the second-biggest crude producer after Saudi Arabia in the Organization of the Petroleum Exporting Countries. A senior Iraqi oil official told Reuters foreign energy firms continue operating normally in the country.

Trump has repeatedly said the US would bomb Iran if the two countries cannot reach a deal regarding Iran's nuclear-related activity including uranium enrichment.

Iran's Minister of Defense Aziz Nasirzadeh on Wednesday said Iran will strike US bases in the region if talks fail and if the US initiates conflict.

US Special Envoy Steve Witkoff plans to meet Iranian Foreign Minister Abbas Araghchi in Oman on Sunday to discuss Iran's response to a US proposal for a deal.

The UN nuclear watchdog's 35-nation Board of Governors declared Iran in breach of its non-proliferation obligations on Thursday for the first time in almost 20 years, raising the prospect of reporting it to the UN Security Council.