Saudi Arabia’s economy has become the fastest growing in the G20, the influential club of major nations, helped by the country’s ambitious reform plans and a low unemployment rate.
The landmark moment for the Kingdom was revealed in new figures from the International Monetary Fund, which found growth of 8.7% for 2022 in the value of goods and services as measured by gross domestic product (GDP). Non-oil sectors, the focus of the Vision 2030 reforms, grew by 4.8%.
Taking the top spot in the main league table of major world economic powers shows how far the Kingdom has come with its plans to diversify away from dependence on oil. The GDP growth rate also exceeded the 7.6% forecast by the IMF for the year.
And the process is continuing. The proportion of non-oil revenue hit 43% in the second quarter of 2023, reaching about $84bn, or 314.8bn riyals and up from 32% in the same period a year before. Non-oil investments rose 45% driven by the acceleration of mega projects.
Inflation also remained low, even as the economy boomed. Saudi’s Consumer Price Index averaged 2.5% in 2022, and is “currently declining”, the IMF said. It added that inflation was “contained thanks to domestic support, price caps, and the strength of the US dollar”.
The Vision 2023 reforms are helping the Kingdom become more resilient to falls in the price of oil, which remains its biggest export. Last year, the price of Brent crude reached about $100 while it was less than $80 by September 2023.
This decline reduced revenue from oil exports and came as manufacturing slowed in China and spending levels fell in the United States.