Saudi Arabia’s economy grew at the fastest pace since 2022 during the fourth quarter of last year, buoyed by expansion of both the oil and non-oil sectors as the kingdom continues to pursue its economic diversification agenda.
The country’s gross domestic product grew by 4.4 per cent on an annual basis during the three-month period to the end of December “supported by the growth of key economic activities”, the kingdom’s General Authority for Statistics said on Thursday.
This rise is markedly higher than the 2.8 per cent year-on year GDP growth recorded in the third quarter of 2024, and is the sharpest rate of expansion in the past two years, according to Gastat data.
The non-oil sector of Saudi Arabia, the biggest Arab economy, expanded by 4.6 per cent on an annual basis for the three months to the end of December, Gastat said in its latest quarterly flash estimates. The oil sector recorded a 3.4 per cent jump − up from a 0.05 per cent rise reported in the third quarter of 2024.
This preliminary data also showed that the seasonally adjusted real GDP increased by 0.3 per cent in the last quarter of 2024, compared to the July-September period last year.
“There was positive momentum” towards the end of 2024, and the “non-oil sector also ended the year strongly”, Daniel Richards, senior Mena economist at Emirates NBD said in a note on Thursday.
“A major contributing factor to this was the return of oil GDP to growth for the first time since first-quarter 2023.”
The kingdom, Opec’s biggest crude producer, did not have to take the burden of additional Opec+ oil production curbs through the year, which means that “those introduced 12 months earlier started to pass through into the base and no longer exert a drag on headline output”, Mr Richards added.
The quarterly flash estimate of GDP provides an assessment of an economy’s health and the estimated pace of growth. Gastat said it will publish the final real GDP growth results in March.
Saudi Arabia is focused on diversifying its economy away from oil as part of the kingdom’s Vision 2030 overarching transformation agenda, which also seeks to boost employment and foreign direct investment into the country.
The kingdom is focusing on tourism, health and education and has also launched multi-billion-dollar projects to support the development of technology, property and infrastructure projects. It is also expanding its industrial and mining base.
In June 2024, Saudi Minister of Investment Khalid Al Falih said the kingdom was more than halfway through implementing Vision 2030. However, Finance Minister Mohammed Al Jadaan said the timetable and size of some of the projects under Vision 2030 would be adjusted because of economic and geopolitical challenges.
Three months later, S&P said continued execution of Vision 2030 initiatives will support strong non-oil growth over the medium term, while the recalibration of some large infrastructure projects will help contain pressure on Saudi public finances.
The ratings agency expects the kingdom’s GDP to continue growing until 2027, boosted by investments in the non-oil sector, the rise in consumption rates and its expectation that the country will emerge in the long term as a more diversified economy.
Saudi Arabia estimates its economy to expand by 4.6 per cent this year and 3.5 per cent in 2026. Earlier this month, the International Monetary Fund downgraded its GDP expansion forecast for the kingdom by 1.3 percentage points to 3.3 per cent for 2025, citing slower growth of the oil sector and extend production cuts by Opec+.
How to play the stock market recovery in 2021?
If you are looking to build your long-term wealth in 2021 and beyond, the stock market is still the best place to do it as equities powered on despite the pandemic.
Investing in individual stocks is not for everyone and most private investors should stick to mutual funds and ETFs, but there are some thrilling opportunities for those who understand the risks.
Peter Garnry, head of equity strategy at Saxo Bank, says the 20 best-performing US and European stocks have delivered an average return year-to-date of 148 per cent, measured in local currency terms.
Online marketplace Etsy was the best performer with a return of 330.6 per cent, followed by communications software company Sinch (315.4 per cent), online supermarket HelloFresh (232.8 per cent) and fuel cells specialist NEL (191.7 per cent).
Mr Garnry says digital companies benefited from the lockdown, while green energy firms flew as efforts to combat climate change were ramped up, helped in part by the European Union’s green deal.
Electric car company Tesla would be on the list if it had been part of the S&P 500 Index, but it only joined on December 21. “Tesla has become one of the most valuable companies in the world this year as demand for electric vehicles has grown dramatically,” Mr Garnry says.
By contrast, the 20 worst-performing European stocks fell 54 per cent on average, with European banks hit by the economic fallout from the pandemic, while cruise liners and airline stocks suffered due to travel restrictions.
As demand for energy fell, the oil and gas industry had a tough year, too.
Mr Garnry says the biggest story this year was the “absolute crunch” in so-called value stocks, companies that trade at low valuations compared to their earnings and growth potential.
He says they are “heavily tilted towards financials, miners, energy, utilities and industrials, which have all been hit hard by the Covid-19 pandemic”. “The last year saw these cheap stocks become cheaper and expensive stocks have become more expensive.”
This has triggered excited talk about the “great value rotation” but Mr Garnry remains sceptical. “We need to see a breakout of interest rates combined with higher inflation before we join the crowd.”
Always remember that past performance is not a guarantee of future returns. Last year’s winners often turn out to be this year’s losers, and vice-versa.
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Jordan cabinet changes
In
- Raed Mozafar Abu Al Saoud, Minister of Water and Irrigation
- Dr Bassam Samir Al Talhouni, Minister of Justice
- Majd Mohamed Shoueikeh, State Minister of Development of Foundation Performance
- Azmi Mahmud Mohafaza, Minister of Education and Minister of Higher Education and Scientific Research
- Falah Abdalla Al Ammoush, Minister of Public Works and Housing
- Basma Moussa Ishakat, Minister of Social Development
- Dr Ghazi Monawar Al Zein, Minister of Health
- Ibrahim Sobhi Alshahahede, Minister of Agriculture and Minister of Environment
- Dr Mohamed Suleiman Aburamman, Minister of Culture and Minister of Youth
Out
- Dr Adel Issa Al Tawissi, Minister of High Education and Scientific Research
- Hala Noaman “Basiso Lattouf”, Minister of Social Development
- Dr Mahmud Yassin Al Sheyab, Minister of Health
- Yahya Moussa Kasbi, Minister of Public Works and Housing
- Nayef Hamidi Al Fayez, Minister of Environment
- Majd Mohamed Shoueika, Minister of Public Sector Development
- Khalid Moussa Al Huneifat, Minister of Agriculture
- Dr Awad Abu Jarad Al Mushakiba, Minister of Justice
- Mounir Moussa Ouwais, Minister of Water and Agriculture
- Dr Azmi Mahmud Mohafaza, Minister of Education
- Mokarram Mustafa Al Kaysi, Minister of Youth
- Basma Mohamed Al Nousour, Minister of Culture
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