Saudi Arabia’s Economy Responds to Oil Strategy with Diverse Growth
Saudi Arabia's economy faced a significant decline of 4.5% year-on-year in the third quarter, marking the first contraction since the beginning of 2021.
This drop is a direct result of intentionally reducing the country’s oil production, a strategic move aimed at supporting global oil prices.
While the oil sector experienced a setback, the non-oil segment, which has been a focus of investment by Crown Prince Mohammed bin Salman, managed to achieve a 3.6% growth rate. Diversifying the economy beyond its heavy reliance on oil is emphasized by statistics from the General Authority for Statistics.
The oil sector reported a stark 17.3% decline in its gross domestic product (GDP) during Q3, a significant contrast to the revised 3.8% contraction in the previous quarter. Saudi Arabia’s strategic management of oil production to influence global oil prices impacts the GDP, alongside broader economic implications.
Looking ahead, Saudi Arabia predicts a minimal 0.03% increase in overall GDP growth for 2023, a notable departure from its previous position among the fastest-growing major economies to potentially becoming one of the slowest.
READ MORE: USDT Leads $55B Transactions, Surpassing Bitcoin in Brazil
Beyond the economic effects of reduced oil production, the country’s financial stability is also impacted. An expected budget deficit equivalent to 2% of its GDP looms, given the heavy reliance on oil sector revenue for fiscal health.
In response to the tightening global oil supply and resulting increased oil prices due to planned production cuts, Saudi Arabia extended its voluntary oil production cuts until year-end.
Acting as the de facto leader of the Organization of the Petroleum Exporting Countries (OPEC), the nation is committed to decreasing oil production by one million barrels per day (bpd) through November, with a reassessment planned in the following month to evaluate the ongoing necessity.
Alexander Stefanov
Reporter at CoinsPress
Alex is an experienced finance journalist and a cryptocurrency and blockchain enthusiast. With over five years of experience covering the industry, he deeply understands the complex and constantly evolving world of digital assets. His insightful and thought-provoking articles provide readers with a clear picture of the latest developments and trends in the market. His passionate approach allows him to break down complex ideas into accessible and insightful content. Follow up on his content to be up to date with the most important trends and topics - stay ahead of the curve with CoinsPress.
