The initial data from Saudi Arabia’s 2022 census was published at the end of May. The main headline was that the population living in Saudi Arabia is considerably smaller than previously thought. While the lower population estimates have provoked some negative reaction – bigger is often seen as better – what has been missed is that a smaller population means less pressure on infrastructure and puts some key economic indicators in a more favorable light.

Takeaways From the 2022 Census

The 2022 census conducted by the General Authority for Statistics provides updated and comprehensive information on the Saudi population, composition of households, and housing stock. Data on education, health, migration, and the labor market has also been collected and will be released later.

The census estimates the total population (Saudis and Non-Saudis) living in Saudi Arabia at 32.2 million in 2022. The General Authority for Statistics took the information in the 2022 census to revise its estimates of the population in earlier years. Previously, the 2010 census data together with estimates of births, deaths, and net migration flows had been used to estimate the population. Following these revisions, the population in 2021 is now estimated at 30.8 million compared to 34.1 million previously. Indeed, the population estimates have been revised lower for every year since 2010 by an average of 8%.

The lower population estimates are due entirely to a smaller number of Saudis. The revised 2021 population estimate for Saudi nationals is 18.4 million compared to 21.7 million previously. Interestingly, the Saudi working-age population (age 15 and above) has fallen dramatically with nearly 35% of Saudi nationals estimated to be under the age of 15 in 2022 compared to 30% in the 2021 estimates.

There is little change to the estimate of the number of non-Saudis who were living in Saudi Arabia in 2021 (although the gender composition has changed with considerably more males and fewer females now reported). For the first time, a detailed picture of the nationalities of non-Saudis is provided. Nationals of Bangladesh, India, and Pakistan comprise 44% of the total, while those from countries experiencing conflict (Sudan, Syria, Yemen) account for 23%.

Despite the downward revisions, population growth has still been substantial. Since 2010, the population living in Saudi Arabia has increased by around one-third (from 24 million to just over 32 million in 2022). However, since 2017, population growth has slowed to an average of just 0.8% per year with the number of non-Saudis declining substantially from 14.6 million in 2016 to 13.4 million in 2022 as Saudization policies were tightened and the effects of the coronavirus pandemic hit the economy.

Why the Downward Revisions to Population Estimates?

Little explanation has been provided by the statistical authorities for the lower population estimates. This is the first census since 2010, and new statistical and data gathering techniques and greater digitalization should certainly have improved the accuracy of estimates in the intervening years. However, it is not clear why these improvements would result in lower rather than higher population estimates. While it is easy to speculate that the non-Saudi population is difficult to accurately measure (it may be hard to elicit responses from expatriates to surveys given language difficulties or a desire to remain under the radar), it is less obvious why Saudi nationals would have been so significantly overestimated in the past. Whether this was due to double counting of nationals who own multiple homes or of adult children who live away from home in the previous census is unclear.

The extent of the revisions has raised questions about the credibility of the census estimates, so it is important that the authorities clarify the reasons for the large revisions to remove any concerns about the quality of the data.

Economic Implications of a Smaller Population

A smaller population could be seen as negative, particularly if population size is equated with political and economic power. The downward revision to the population level and its slow rate of growth in recent years do mean that it will be even more challenging to reach the 50 million population that has been put forward by the country’s leaders. From the perspective of several key economic indicators, however, a smaller population has a positive impact. Further, demands on existing infrastructure and the pressure to build out new infrastructure will be lessened by a smaller population.

Any economic indicator that is shown in per capita terms (i.e., is divided by the population size) will now be higher. Nominal gross domestic product per capita, which is often seen as a proxy for the economic well-being of a country, is now estimated at $34,500 in 2022, over 8% higher than previously thought. This boosts Saudi Arabia’s position in the global GDP per capita league table from 36th to 29th. Similarly, the country’s net external financial wealth (net international investment position) per capita is higher by over $4,000 at $33,000 in 2021.

Labor market indicators will also be affected. The General Authority for Statistics recently noted in its quarterly “Labor Force Statistics” that, “The independent population estimates used in the Q1 2023 were based on 2021 Mid-year population estimates produced by the Population and Housing Division. Population estimates based on the 2022 Census have yet to be finalized and released.” While at this stage the nature and scope of potential revisions is unclear, there would seem to be two broad ways they could be affected.

First, employment-to-population ratios and labor force participation rates – the share of the working-age population that is employed or unemployed and actively searching for a job – could rise. This is because the estimated working-age population is now smaller. Unless the estimates of employed and unemployed people decline by a similar margin to the working-age population, these ratios will rise. These changes could be large – the female labor force participation rate could have been 42% rather than 34% in mid-2021.

Second, estimates of the number of employed and unemployed people could decline. The “Labor Force Survey” estimates are based on a rotating sample of households and this sample will now reflect a higher share of the working-age population at any time. Hence, less “scaling up” is needed to reflect the actual size of the working-age population. A lower level of employment would mean that labor productivity estimates would rise (levels, not growth rates). In other words, Saudi Arabia would be producing more output per worker than previously thought.

Revisions to the labor market statistics will likely wait until the remaining census data is published. These revisions could have important implications as higher labor force participation rates of Saudis, particularly Saudi women, and a more productive economy are central goals of Vision 2030.

Correction: This piece originally stated Saudi Arabia’s 2021 net external financial wealth is $50,000 higher at $337,000 when accounting for lower population estimates. The correct figure is over $4,000 higher at $33,000.