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Saudi Arabia leads region’s economies with a GDP exceeding $1 trillion

 

Data from the International Monetary Fund confirms that the Kingdom of Saudi Arabia is leading the economies of the region with a GDP exceeding one trillion dollars. The growth of the Saudi economy, which is $1 trillion in size, was primarily driven last year by record production of crude oil, reaching 10.5 million barrels per day, at an average price of $100 per barrel.

 

 Expectations for Saudi Arabia’s Economic Growth

 

The latest report by the International Monetary Fund has witnessed a significant reduction in the growth expectations of the Saudi Arabian economy for this year to 1.9% after the Kingdom topped the economies of the G20 countries last year with a growth rate of 8.7%.

 

This decrease by 1.2% points in just three months is mainly due to Saudi Arabia’s voluntary reduction in oil production, which reduced its petroleum revenues by more than a third in May on an annual basis, registering its lowest level since September 2021.

 

 Voluntary Oil Reductions

 

Jean Michel Saliba, Middle East and North Africa economist at Bank of America believes that “Saudi Arabia’s reduction of oil production may be costly.” Meanwhile, a recent survey by Bloomberg concludes that if production cuts are not reversed this year, the country’s economy is likely to rank below only Argentina on the G20 list.

 

According to data released by the Saudi General Authority for Statistics, oil export values fell 38% in May compared to the same month last year, to reach $19 billion. This reflected a decline in the country’s trade surplus in May by 66% on an annual basis to $7.9 billion, the lowest level since April 2021.

 

Middle East Growth Outlook

 

According to the latest report on the World Economic Outlook issued today by the International Monetary Fund, fuel prices are estimated to decline by around 21% this year due to the global economic slowdown, after jumping by 39% last year.

 

The fund also noted that the reduction in growth expectations for the Middle East and North Africa region for 2023, from 3.1% to 2.6%, is mainly due to “slower growth in Saudi Arabia than expected.” The reason cited is the Kingdom’s reduction in oil production in line with the OPEC+ alliance agreement.

 

 Supporting Strong Growth for the Saudi Economy

 

On the other hand, the IMF report noted that private investment in Saudi Arabia, including that resulting from the implementation of major projects, continues to support strong growth for the country’s non-oil GDP. This is in line with the “Saudi Vision 2030” targets to diversify the economy and enhance sources of income away from oil.

 

In contrast to Saudi Arabia, the IMF raised its expectations for the growth of the Russian economy, the Kingdom’s main ally in OPEC+, to 1.5% this year, up from only 0.7% as of April projections, driven by strong activity in retail trade, construction, and industrial production during the first half.

 

Khalid Al-Falih, the Saudi Minister of Investment, emphasized the Kingdom’s commitment to connecting the Arab world with China and expanding the investments of countries in the region. He noted that the Gross Domestic Product of Arab countries exceeds $3.5 trillion, with one-third of it located in Saudi Arabia.

 

During the 10th Arab-Chinese Businessmen Conference, he highlighted the event’s reflection of Saudi Arabia’s keenness to strengthen its relations with China.

 

He revealed that foreign direct investment outside of China has grown by 20% annually over the past decade, with only $23 billion going to Arab countries.

 

He stated, “Through the conference, we are working on launching a new modern Silk Road driven by Saudi Arabia’s Vision 2030 for cooperation and partnership fueled by our youth and innovations to achieve our interests and those of our partners around the world.”

 

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