Saudi Arabia’s economy contracted by 3.7 percent in the fourth quarter of 2023 compared to the previous year, reflecting a drop in oil revenue, the government’s statistics agency said on Wednesday.
The decline in real gross domestic product “was due to the decrease in oil activities by 16.4 percent, while non-oil activities and government activities grew by 4.3 percent and 3.1 percent respectively, on an annual basis”, the government’s General Authority for Statistics said, citing preliminary estimates.
The world’s biggest crude exporter is trying to transition its economy away from fossil fuels under Crown Prince Mohammed bin Salman’s Vision 2030 reform agenda, which aims to position Saudi Arabia as a tourism, business and sports hub.
Oil firm Saudi Aramco - of which the government owns 90 percent - had reported record profits in 2022 following the spike in oil prices spurred by Russia’s invasion of Ukraine.
But prices were lower last year and, after a series of supply cuts dating back to October 2022, the Gulf kingdom’s daily production stands at approximately nine million barrels per day, far below its capacity of 12 million bpd.
On Tuesday, Aramco announced that, on orders from the energy ministry, it would abandon a plan to ramp up its production capacity to 13 million bpd by 2027, a decision that analysts said could reflect uncertainty about market demand in the years to come.
Taking 2023 as a whole, real, or price-adjusted GDP was down 0.9 percent compared to 2022, the statistics authority said on Wednesday.
The finance ministry had announced in December it was expecting real GDP growth of just 0.03 percent in 2023 and 4.4 percent this year.
The ministry also said it was projecting a budget deficit of 2.0 percent of GDP in 2023 and 1.9 percent of GDP this year, reflecting rising spending and lower oil revenue.
