Saudi Arabia's 2023 economic outlook (in 7 charts by Strategic Gears)

29 January 2023 5 min. read

Strategic Gears has released its 2023 economic outlook for Saudi Arabia, with its report providing in-depth insight into the state of the Kingdom’s economy across key aspects such as monetary, fiscal and labour market, as well as progress expected to be realised in the coming twelve months – as part of the government’s Vision 2030 strategy.

A round-up of the report’s key findings and predictions in seven charts:

On the back several crises, including a cost of living crisis, the Russia-Ukraine war, geopolitical conflict and more, the outlook for the global economy in 2023 has dampened, with growth across the board expected to slow to 2.7%. However, many of the world’s top economic markets are expected to fall into a recession.

GDP Growth Rates (Annual % Change)

One of the globe’s brighter spots, the GCC is predicted to buck the global slump. According to the analysis by Strategic Gears, Saudi Arabia (together with the UAE) will dominate GCC growth in 2023.

Real GDP Growth (%)

In 2022, Saudi Arabia’s gross domestic product (GDP) hit the SAR 4 trillion mark, with growth in private consumption and gross fixed capital formation driving overall GDP growth. Notably, Saudi Arabia’s government said the Kingdom targets a GDP of SAR 6.4 trillion by 2030.

GDP by Expenditure at Constant Prices (SAR, T)

A key component of private consumption, point-of-sale and e-commerce transactions showed healthy spending in 2022, despite higher inflation and early-year concerns about economic uncertainty.

Saudi Arabia Point of Sale Transations

Meanwhile, looking ahead into 2023, two other indicators for private investment, the Saudi Purchasing Managers Index (PMI) and the Industrial Production Index (IPI), are showing strong momentum, hinting at further growth in domestic demand and business confidence.

Thanks to booming oil-based revenues, Saudi Arabia in 2022 booked its first fiscal surplus since 2013, at SAR 90 billion (2.3% of GDP). In 2023, the fiscal windfall is expected to continue, with the fiscal surplus forecasted to end the year at SAR 9 bilion (0.2% of GDP).

The fiscal surplus days are back Surplus/Deficit, Revenue & Expenditure (SAR, B)

A streak of years with a fiscal surplus means that Saudi Arabia will see its public debt drop from 24.9% of GDP in 2022 to 22.6% of GDP in 2025.

Higher oil revenue in 2022; non-oil share sustained Saudi Arabia Total Revenue Breakdown (% of Total)

Over the past decade, the share of non-oil income to total revenues has grown rapidly from 10% to circa the 40% mark (depending on the year). However, high oil prices as a result of the (partly) Western boycott of Russian oil meant that the oil-based contribution in 2022 hit a 4-year high, at about 70%.

Saudi Arabia's Vision 2030 aims to cut unemployment from 11.6% in 2015 to 7% by 2030. According to Strategic Gears’ report, the overall unemployment rate (Saudis and non-Saudis) fell to its lowest level since the General Authority for Statistics (GASTAT) began reporting quarterly statistics in 2016.

Both Saudi male & female unemployment at a record low Unemployment Rate % (15+ years old)

Assuming that momentum from 2022 carries over, employment growth is predicted to continue in 2023, led by both non-oil domestic activity and government initiatives. The private sector will also act as a source of employment and growth.

Commentary by Strategic Gears

Summarising some of the report’s key findings, Strategic Gears’ concluded: “The 2023 forecast assumes continued momentum from 2022’s stellar 8.5% growth and expansion in non-oil domestic economic activity in 2023, led by the private sector. Growth in 2023 will be fuelled by the robust expansion of the non-oil sector and sustained oil activity.”

“As part of Vision 2030, the Kingdom will in 2023 continue to implement a wave of reforms that underline its dedication to diversifying the economy.”

“The Public Investment Fund (PIF) and the National Development Fund (NDF) will continue to provide additional stimulus to the Saudi economy. The growing number of PIF and NDF backed initiatives will be key to cultivating global investor trust and ushering in FDI going forward.”

“The Kingdom’s inflation rate will continue to be the lowest among G20 members and among the lowest worldwide in 2023, supporting, among other things, private consumption, and tourism in the Kingdom. Fiscal restructuring continues to assist in streamlining operating spending and diversifying income sources.”

“The year 2023 is expected to witness interesting activity in the travel, tourism and hospitality space, entertainment and related industries, progress on green initiatives (as part of the Saudi and MENA Green Initiatives), and the mining industry. More companies are expected to also sign up and shift regional headquarters to Riyadh (before the January 2024 deadline).”