Saudi non-oil sector growth steady at 5.3% in Q1, says report

Saudi non-oil sector growth steady at 5.3% in Q1, says report

Saudi Arabia’s economy registered a 3.8% y/y growth for the first three months of the year, mainly driven by the non-oil sector which remained robust at 5.3% y/y in Q1 2023, unchanged from Q4 and Q3 2022, according to a report by leading UAE bank Emirates NBD.

The transport, storage and communication sector grew 9.3% y/y, while trade, restaurants and hotels saw real output growth accelerate to 7.5% y/y, it stated, adding the construction sector also posted stronger growth in Q1 at 5.5% y/y.

According to Emirates NBD, the growth in key sectors such as finance, insurance and real estate slowed last quarter to 2.8% y/y from 3.9% in Q4 2022. Government services, which account for around 14% of total GDP, grew 4.9% y/y in Q1 – the fastest pace of growth in this sector since 2018.

On the expenditure side, consumption accelerated to 7.8% y/y from 4.5% in Q4 2022, driven by a surge in government consumption (16.2% y/y). Budget data for Q1 showed government spending on goods and services rose 70% y/y. Private consumption growth also picked up to 3.9% y/y but was weaker than in H1 2022.

Gross fixed capital formation has maintained its recent strong growth, although slowing slightly from