Saudi Arabia’s Current Account Surplus Soars in First Quarter
In a remarkable display of economic strength, Saudi Arabia’s first-quarter current account surplus surged to SR28.6 billion ($7.6 billion), marking a 75.46 percent increase from the previous quarter. This impressive growth was primarily fueled by robust services exports, according to an analysis by S&P Global Market Intelligence.
Services exports during the first three months of the year reached an impressive SR58.7 billion, the second-highest quarterly figure on record. This surge was driven by revenues from travel services, particularly related to the Hajj pilgrimage, which saw a peak of SR61.7 billion in the second quarter of 2023.
As Saudi Arabia continues to diversify its economy away from oil, the country has been focusing on strengthening its service sector, including travel and tourism. The efforts have paid off, with the travel and tourism sector alone expanding by over 32 percent in 2023, contributing a record SR444.3 billion to the Kingdom’s GDP, as per the World Travel and Tourism Council’s 2024 Economic Impact Research.
S&P Global’s report highlighted the significance of the strong services exports, emphasizing the accelerated growth in tourism and travel revenues outside of the Hajj season. However, the report also noted a 1.2 percent decrease in Saudi Arabia’s oil exports in the first quarter, attributed to the voluntary oil production cuts by OPEC+ members.
Despite this decline in oil exports, S&P Global remains optimistic about Saudi Arabia’s economic outlook, forecasting a current account surplus equivalent to 3.2 percent of the GDP for the entire year of 2024. The forecast hinges on the assumption that the Kingdom’s oil supply cuts will continue throughout the year.
While non-oil exports showed moderate performance in the first quarter, the report emphasized the need for Saudi Arabia to enhance its exports of non-oil goods to reduce reliance on oil, in line with the goals of Vision 2030. S&P Global concluded that more efforts are required to lessen the country’s dependency on oil exports.