Saudi Arabia: Economy tallies strongest expansion since Q1 2023 in Q3
GDP reading: According to a preliminary reading, GDP rebounded in the third quarter, expanding 2.8% year on year. This was above the 0.3% contraction logged in the second quarter and marked the best result since Q1 2023.
However, the jump in annual growth was largely due to a base effect created by Saudi Arabia cutting oil output by 10% from July last year: On a seasonally adjusted quarter-on-quarter basis, economic growth nearly halved to 0.8% in Q3, compared to the previous period’s 1.4% expansion and marking the weakest reading since Q4 2023.
Drivers: Looking at a breakdown of the annual growth figure, the rebound was largely due to the oil sector returning to growth—albeit only slightly—for the first time since Q1 2023. In contrast, non-oil activities and government spending both grew at a weaker pace compared to the prior quarter.
GDP outlook: Our panelists expect annual GDP growth to accelerate through Q2 2025 as oil production cuts agreed with OPEC+ are rolled back from January. Annual GDP growth should then decelerate slightly in H2 2025 on a tougher base effect while remaining stronger than in most MENA countries on a flourishing non-oil sector. The main downside risk is regional conflict. Oil prices are a key factor to watch due to their effect on government spending.