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Non-oil Sector Leads Saudi Arabia’s GDP Growth in Second Quarter

Non-oil activities achieved a positive growth of 6.1% during the second quarter of 2023. (SPA)
Non-oil activities achieved a positive growth of 6.1% during the second quarter of 2023. (SPA)
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Non-oil Sector Leads Saudi Arabia’s GDP Growth in Second Quarter

Non-oil activities achieved a positive growth of 6.1% during the second quarter of 2023. (SPA)
Non-oil activities achieved a positive growth of 6.1% during the second quarter of 2023. (SPA)

The surge of the non-oil economy in Saudi Arabia at a rate of 6.1 percent, during the second quarter of 2023, led the Kingdom to raise its estimates of GDP growth from 1.1 percent to 1.2 percent.

On July 31, the General Authority for Statistics (GASTAT) issued preliminary estimates, which pointed that the GDP growth reached 1.1 percent in the second quarter of the year.

The GASTAT recent report noted that most economic activities recorded positive growth rates on an annual basis in the second quarter of 2023, with transport, storage and communication activities registering the highest rates of 12.9 percent.

This was supported by the launch of a number of developments and projects, including the official inauguration of Riyadh Air, which will start operating by 2025, according Jadwa Investment.

Wholesale and retail trade, restaurants and hotel activities also grew by 9.8 percent in the second quarter compared to the same period of 2022.

The construction sector also rebounded strongly, growing by 4 percent during the second quarter on an annual basis, in an upward trend, after nearly two years of stagnation that was mainly due to the outbreak of the Covid-19.

On Wednesday, the International Monetary Fund (IMF), in a statement issued by its Executive Board at the conclusion of the 2023 Article IV consultation with Saudi Arabia, expected that the real non-oil GDP in the Kingdom would grow by 4.9 percent during 2023, and 4.4 percent during 2024.

The statement added that the IMF Board “welcomed Saudi Arabia’s ongoing economic transformation, supported by commendable reforms under the Vision 2030 agenda and higher oil prices, which has helped create high growth, record low unemployment, contained inflation, and strong external and fiscal buffers, while reducing reliance on oil.”

The GASTAT report showed that the GDP increased by 1.2 percent in the second quarter on an annual basis, while it decreased by 0.2 percent on a quarterly basis compared to the first quarter of the year.

GASTAT further noted that the Kingdom’s oil activities decreased by 4.3 percent in the three months to the end of June, compared to the same period of the previous year, while it dropped by 1.5 percent from the first quarter of 2023.

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Honda and Nissan Start Merger Talks in Historic Pivot

Makoto Uchida, Director, Representative Executive Officer, President and CEO of Nissan Motor Corporation, Toshihiro Mibe, Director, President and Representative Executive Officer of Honda and Takao Kato, Director, Representative Executive Officer, President & CEO of Mitsubishi Motors, attend a joint press conference on their merger talks, in Tokyo, Japan, December 23, 2024. REUTERS/Kim Kyung-Hoon
Makoto Uchida, Director, Representative Executive Officer, President and CEO of Nissan Motor Corporation, Toshihiro Mibe, Director, President and Representative Executive Officer of Honda and Takao Kato, Director, Representative Executive Officer, President & CEO of Mitsubishi Motors, attend a joint press conference on their merger talks, in Tokyo, Japan, December 23, 2024. REUTERS/Kim Kyung-Hoon
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Honda and Nissan Start Merger Talks in Historic Pivot

Makoto Uchida, Director, Representative Executive Officer, President and CEO of Nissan Motor Corporation, Toshihiro Mibe, Director, President and Representative Executive Officer of Honda and Takao Kato, Director, Representative Executive Officer, President & CEO of Mitsubishi Motors, attend a joint press conference on their merger talks, in Tokyo, Japan, December 23, 2024. REUTERS/Kim Kyung-Hoon
Makoto Uchida, Director, Representative Executive Officer, President and CEO of Nissan Motor Corporation, Toshihiro Mibe, Director, President and Representative Executive Officer of Honda and Takao Kato, Director, Representative Executive Officer, President & CEO of Mitsubishi Motors, attend a joint press conference on their merger talks, in Tokyo, Japan, December 23, 2024. REUTERS/Kim Kyung-Hoon

Honda and Nissan have started talks toward a potential merger, they said on Monday, a historic pivot for Japan's auto industry that underlines the threat Chinese EV makers now pose to some of the world's best known car makers, Reuters said.
The integration would create the world's third-largest auto group by vehicle sales after Toyota and Volkswagen. It would also give the two companies scale and a chance to share resources in the face of intense competition from Tesla and more nimble Chinese rivals, such as BYD.
The merger of the two storied Japanese brands - Honda is Japan's second-largest automaker and Nissan its no. 3 - would mark the biggest reshaping in the global auto industry since Fiat Chrysler Automobiles and PSA merged in 2021 to create Stellantis in a $52 billion deal.
Smaller Mitsubishi Motors, in which Nissan is top shareholder, was also considering joining, the companies said. The chief executives of all three companies held a joint press conference in Tokyo.
"The rise of Chinese automakers and new players has changed the car industry quite a lot," Honda CEO Toshihiro Mibe told the press conference.
"We have to build up capabilities to fight with them by 2030, otherwise we'll be beaten," he said.
The two companies would aim for combined sales of 30 trillion yen ($191 billion) and operating profit of more than 3 trillion yen through the potential merger, they said.
They aimed to wrap up talks around June 2025 and then set up a holding company by August 2026, at which time both companies' shares would be delisted.
Honda has a market capitalisation of more than $40 billion, while Nissan is valued at about $10 billion.
Honda will appoint the majority of the holding company's board, it said.
Combining with Mitsubishi Motors would take the Japanese group's global sales to more than 8 million cars. The current No. 3 group is South Korea's Hyundai and Kia .
Honda and Nissan have been exploring ways to bolster their partnership, including a merger, Reuters reported last week.
The two companies said in March they were considering cooperation on electrification and software development. They agreed to conduct joint research and widened the collaboration to Mitsubishi Motors in August.
Last month, Nissan announced a plan to cut 9,000 jobs and 20% of its global production capacity after sales plunged in the key China and U.S. markets. Honda also reported worse-than-expected earnings due to declining sales in China.
Like other foreign carmakers, Honda and Nissan have lost ground in the world's biggest market China to BYD and other local brands that make electric and hybrid cars loaded with innovative software.
In a separate online press conference with the Foreign Correspondents Club of Japan on Monday, former Nissan chairman Carlos Ghosn said he did not believe the Honda-Nissan alliance would be successful, saying the two automakers were not complementary.
Ghosn is wanted as a fugitive in Japan for jumping bail and fleeing to Lebanon. His 2018 arrest for financial wrongdoing pitched Nissan into a crisis.
French automaker Renault, Nissan's largest shareholder, is open in principle to a deal and would examine all the implications of a tie-up, sources have said.
Taiwan's Foxconn, seeking to expand its nascent EV contract manufacturing business, approached Nissan about a bid but the Japanese company rejected it, sources have told Reuters.
Foxconn decided to pause the approach after it sent a delegation to meet with Renault in France, Bloomberg News reported on Friday.
Shares in Honda ended the day up 3.8%, Nissan rose 1.6% and Mitsubishi Motors gained 5.3% after the news reports on the details of the planned merger, while the benchmark Nikkei closed up 1.2%.