Saudi Arabia General Government Revenues (SAR bn)

The economy is likely growing quickly so far in Q1 2023, but not by quite as much as it did last year. On the one hand, the non-oil PMI rose to a near eight-year high in February, boding well for the non-hydrocarbons sector. On the other hand, average oil production in January was down 2% compared to the same period last year and 7% compared to Q4 2022, boding poorly for the hydrocarbons sector. While the non-hydrocarbons sector continues to be supported by low inflation and the government’s Vision 2030 diversification reforms, the hydrocarbons sector has been hit by OPEC+ deciding in October 2022 to cut output quotas from November 2022 onward. Recent news suggests this bifurcation will remain ahead: In recent weeks, the government said the current OPEC+ deal would continue until the end of the year and then announced more than USD 50 billion of investments in local non-oil sector companies.