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Saudi Arabia’s economy shrank in the third quarter by 4.5% year-over-year, due to lower oil production and activities, the General Authority for Statistics of the world’s top crude oil exporter said on Tuesday.
The flash estimates of the authority showed that lower oil activities dragged down the economy into the first quarterly decline since the beginning of 2021.
Non-oil activities and government activities grew by 3.6% and 1.9%, respectively, on an annual basis, during the third quarter.
Seasonally adjusted real gross domestic product (GDP) fell by 3.9% between July and September, compared to the previous quarter, the flash estimates showed. This decrease was due to the drop in oil activities and government activities by 8.4% and 5.3%, respectively, while non-oil activities inched up by 0.1% on a quarterly basis.
At the beginning of this month, Saudi Arabia said that it would continue cutting an extra 1 million barrels per day (bpd) from its crude oil production in November and December.
The cuts are expected to take their toll on the Saudi economy this year, major forecasters have said in recent months.
Despite the extension of the oil production cuts, Saudi Arabia is set to keep the growth momentum in its non-oil sector, which accounts for around 60% of GDP, according to the International Monetary Fund (IMF).
While oil exports from the world’s top crude oil exporter are falling, the non-oil economy in the Kingdom is faring well and will do so in the near term, Amine Mati, the IMF’s mission chief for Saudi Arabia, told Bloomberg in an interview last month.
Earlier this year, the IMF said that Saudi Arabia’s economy is set to markedly slow down this year from last year’s 8.7% growth due to the oil production cuts the world’s top crude exporter is implementing in a bid to “stabilize the market.”
By Tsvetana Paraskova for Oilprice.com
Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews.