Saudi Arabia's non-oil sector grows 4.9% in Q2 2024

Saudi Arabia's non-oil sector has shown notable growth, with a 4.9% year-on-year increase in the second quarter of 2024. This rise is seen as a positive signal for the Kingdom's broader economic diversification goals, especially under the Vision 2030 framework, which seeks to reduce the country’s reliance on oil revenues. The boost in non-oil GDP contrasts with a slight 0.3% decline in Saudi Arabia’s overall real GDP compared to the same period in 2023. This divergence underscores the ongoing challenges in the global oil market, which saw Saudi oil activities drop by 8.9% year-on-year, even though they recorded a small quarter-on-quarter improvement of 0.9%.

Government activities also contributed to the non-oil expansion, growing by 3.6% annually. The Saudi government’s increased spending has been a key driver, with government final consumption expenditure up 10.9% year-on-year, signaling the state’s strong role in supporting economic growth. This state-driven economic push, coupled with a growing private sector, has been pivotal in propelling sectors such as wholesale and retail, financial services, and the hospitality industry, with each showing significant annual gains.

Additionally, private consumption increased by 2.8% compared to the previous year, reflecting stronger household spending in line with the government’s economic reforms. Gross fixed capital formation, a measure of investment, also posted a modest 3.2% increase, indicating steady investor confidence in non-oil sectors. The construction and financial services industries are among those that have particularly benefited from this investment climate.

Energy-related sectors, including electricity, gas, and water, saw the most robust growth within non-oil activities, registering an 8.9% increase year-on-year. Financial services, insurance, and business activities grew by 7.1%, showing how reforms and the ongoing modernization of the financial sector have borne fruit.