On March 10, the Saudi General Authority for Statistics released detailed gross domestic product data for Saudi Arabia in the fourth quarter of 2023 (the previously released fourth quarter “flash” estimate contained more limited information). The data confirmed that the Saudi economy contracted in 2023. The 0.8% drop in real GDP (i.e., GDP after accounting for inflation) was largely due to the 9% contraction in the oil sector that followed the production cuts under the OPEC+ agreement. Saudi Arabia’s non-oil sector grew by 3.8% and ended the year on a relatively strong note, with growth accelerating in the fourth quarter relative to the third quarter.

Private consumption grew by 5.3% in 2023 compared to 4.9% in 2022. This acceleration was likely due to household incomes increasing and new spending opportunities in entertainment and tourism. Investment spending also grew by 5.3%, but this was a big slowdown from the 21.3% expansion in 2022. This is surprising given the activities of the Public Investment Fund and higher investment by Aramco, the national oil company.

The release of the fourth quarter GDP data does little to change previous expectations about Saudi Arabia’s economic outlook for 2024. A return to positive real GDP growth of around 1.5% is likely in 2024 as the contraction in oil output eases and non-oil growth continues around its current pace. However, with OPEC+ announcing the extension of its oil production cuts until the end of the second quarter, there is a risk that oil GDP contracts by more than projected and drags overall real GDP growth below this forecast.