GDP growth records best reading since Q4 2022 in the fourth quarter

GDP growth hits two-year high: According to a preliminary reading, year-on-year GDP growth improved to 4.4% in the final quarter, up from 2.8% in the third quarter and marking a two-year high. On a seasonally adjusted quarter-on-quarter basis, economic growth slowed markedly to 0.3% in Q4 from the previous quarter's 0.9% increase, marking the softest expansion in a year.

Low base of comparison tees up oil sector growth: The acceleration in year-on-year GDP growth was driven by the oil sector, which expanded 3.4%, the sharpest pace since Q3 2022 (Q3: 0.0% yoy). This was due to a more favorable base of comparison, with the sector shrinking at the fastest pace in a year in seasonally adjusted quarter-on-quarter terms; crude petroleum production fell by nearly a fifth in Q4 2023 as a result of OPEC+ output curbs. Looking at other sectors, non-oil output rose 4.6% (Q3: +4.3% yoy), a rate above pre-pandemic levels—demonstrating that the government’s push to diversify the economy is bearing fruit—but one of the weakest figures in the last four years, suggesting that the recovery from the Covid-19 pandemic is nearing completion. Finally, government spending increased 2.2% (Q3: +3.1% yoy).

GDP growth to pick up: Our panelists expect annual GDP growth to rise further in Q1 2025, reaching the highest level since Q4 2022. The oil sector will continue to benefit from a favorable base of comparison, while the non-oil private sector will be aided by lower interest rates and the government’s continued diversification drive. That said, OPEC+ decided in December to delay hiking crude oil output to April, instead of January as originally planned, weighing on the oil sector. Further delays are a downside risk to GDP growth.

Panelist insight: EIU analysts said: “It is now likely to be late 2026 at the earliest before Saudi Arabia's existing 1m-barrel/day voluntary curb on oil output is fully unravelled. This has implications for the country's economic growth rate; EIU now expects real GDP to expand by 3.4% in 2025, down from our previous forecast of 4.8%, with growth accelerating to 4% in 2026, up from our previous forecast of 2.9%.”

How should you choose a forecaster if some are too optimistic while others are too pessimistic? FocusEconomics collects Saudi Arabian investment projections for the next ten years from a panel of 7 analysts at the leading national, regional and global forecast institutions. These projections are then validated by our in-house team of economists and data analysts and averaged to provide one Consensus Forecast you can rely on for each indicator. By averaging all forecasts, upside and downside forecasting errors tend to cancel each other out, leading to the most reliable investment forecast available for Saudi Arabian investment.

Download one of our sample reports to visualize what a Consensus Forecast is and see our Saudi Arabian investment projections.

Want to get access to the full dataset of Saudi Arabian investment forecasts? Send an email to info@focus-economics.com.