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Saudi Arabia GDP Q3 2023

Saudi Arabia: Economy contracts in Q3 due to slumping oil output

A flash estimate showed that the economy contracted 4.5% on an annual basis in Q3 after expanding 1.2% in Q2. The contraction came after four consecutive quarters in which GDP growth had slowed, and was the sharpest since Q3 2020—the height of the Covid-19 pandemic.

The oil sector slumped 17.3% in Q3 (Q2: -3.8% yoy) as a result of cuts to oil production agreed with OPEC and the 1.00-million-barrels-per-day voluntary cut in place since July.

Meanwhile, growth in the non-oil private sector slowed to 3.6% (Q2: +5.3% yoy), while growth in the government services sector rose to 1.9% (Q2: +0.3% yoy).

On a seasonally adjusted quarter-on-quarter basis, the economy contracted 3.9% in Q3 after weakening 0.4% in Q2.

The economy is likely to remain subdued in Q4. The 1.00-million-barrel-per-day cut to crude production will remain in place until the end of December, likely leading to a sharp contraction in the all-important oil sector. However, growth should pick up in 2024 as the production cuts are rolled back. The exact timing of the rollback remains uncertain, however, posing significant risks to the 2024 outlook.

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