Saudi 3Q GDP Growth Rate 8.6%, Benefiting from High Oil Prices... "Fiscal Surplus Expected"

Only the Petroleum Sector Grows 14.5%... High Growth Trend Continues
Net Foreign Currency Assets Also Increase... Largest Scale Since COVID-19

[Image source=Reuters Yonhap News]

[Asia Economy Reporter Hyunwoo Lee] Saudi Arabia announced that its gross domestic product (GDP) grew by 8.6% year-on-year in the third quarter, benefiting from high oil prices. Net foreign assets also increased to the largest scale since the COVID-19 pandemic.

On the 31st (local time), the Saudi Statistics Authority reported that the GDP growth rate for the third quarter of this year was 8.6% compared to the same period last year, with the oil sector growing by 14.5% and the non-oil sector by 5.6%. The real GDP growth rate for the previous second quarter also recorded 12.2%, continuing the high growth trend. This is attributed to increased oil export revenues due to sustained high oil prices before and after the Ukraine war.

Fiscal revenues, which had been in deficit since COVID-19, also increased significantly. Saudi Arabia's fiscal revenue in the third quarter surged 24% year-on-year to 301.87 billion riyals (approximately 115 trillion won). Among this, oil sector revenue accounted for more than 75% of the total, at 229 billion riyals.

With increased oil exports boosting dollar earnings, net foreign assets also grew to the largest scale since COVID-19. The Saudi Central Bank announced that as of September, Saudi Arabia's net foreign assets reached 1.69 trillion riyals (approximately 639 trillion won), a 2.2% increase from the previous month, marking the largest scale since 2020.

Experts predict that due to the production cut decision by the Organization of the Petroleum Exporting Countries Plus (OPEC+) and the prolonged Ukraine war, high oil prices will continue, leading Saudi Arabia's fiscal balance to turn into a surplus. Monica Malik, Chief Economist at Abu Dhabi Commercial Bank, forecasted, "Although the growth rate of oil sector revenue is somewhat slowing, it is still generating significant profits, so a stable fiscal surplus is expected this year."