This astounding growth was the result of a number of factors, including increased self-sufficiency in production, which reached an astounding 81.2%, and a rise in the investment rate to 27.0%. These statistics increased confidence in the national economy and the Saudi by increasing the amount of local currency deposits to total savings deposits from 66.5 percent in 2021 to 67.7 percent in 2022.
Saudi Arabia achieved a momentous milestone, as the country’s gross domestic product (GDP) has surpassed the coveted trillion-dollar threshold for the first time, reported the Federation of Saudi Chambers. On the occasion of the kingdom’s 93rd National Day, a report revealed that the kingdom’s GDP reached SAR4.155 trillion ($1.1 trillion), exceeding the $1 trillion threshold.
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According to the Saudi Press Agency (SPA), the kingdom has joined the “trillion-dollar club,” achieving its national goal years ahead of the 2025 target. It demonstrates not only the kingdom’s economic prowess but also its commitment to Vision 2030, a transformational plan devised to diversify its economy and reduce its dependence on oil.
An exceptional growth
In 2022, Saudi Arabia’s economy grew by an extraordinary 8.7 percent, outpacing all other G20 members. This astounding growth was the result of a number of factors, including increased self-sufficiency in production, which reached an astounding 81.2%, and a rise in the investment rate to 27.0%. These statistics increased confidence in the national economy and Saudi by increasing the amount of local currency deposits to total savings deposits from 66.5% in 2021 to 67.7% in 2022.
In 2022, Saudi Arabia has effectively joined the exclusive trillion-dollar club, thanks to its robust economic growth and diversification efforts. This rise is partially attributable to the rise in oil prices and the kingdom’s unwavering commitment to Vision 2030, which has bolstered its economy and strengthened its global standing.
In addition, the International Monetary Fund (IMF) has recognized Saudi Arabia as having the fastest-growing economy among G20 members. As reported by the official Saudi Press Agency (SPA), the report from the International Monetary Fund (IMF) highlighted the astounding 8.7 percent growth rate of the kingdom. The Saudi economy also was ranked 17th in the global economy out of the world’s 64 most competitive countries.
What boosted the Saudi economy in 2022?
Several factors contributed to Saudi Arabia’s remarkable development, including an increase in self-sufficiency in production, which reached an astounding 81.2%, and an increase in the investment rate, which rose to 27.3%.
Oil prices and revenue surge: Due to the rise in oil prices, the Saudi economy, which is highly dependent on oil, saw a substantial increase in revenue. The average price of a barrel of Brent crude, the international benchmark, rose to more than $104 in 2022, up from $70.89 in 2021 and $46.69 in 2020. This increase in oil prices was prompted by global events, such as Russia’s invasion of Ukraine and cooperation between Saudi Arabia and Russia to limit oil output via the OPEC+ group of oil-exporting nations.
As a consequence, Riyadh recorded a budget surplus of SR77.9 billion ($20.8 billion) for the second quarter of 2022, as oil revenues increased by nearly 90% year-over-year.
Boosting private investments and employment:
The strengthening of the non-oil private sector is central to Saudi Arabia’s Vision 2030, and Saudi Arabia has made significant progress in this regard. In 2022, the private sector contributed a substantial SR1.63 trillion, or 41 percent of the GDP, representing a year-over-year increase of 5.3%.
Non-governmental investments attained SR907.5 billion with a growth rate of 32.6%, constituting an impressive 87.3% of all fixed investments. Private sector employment also increased significantly, with the number of employees increasing from 8.08 million in 2021 to 9.42 million in 2022, a significant 16.6 percent increase.
In addition, the number of Saudi nationals employed in the private sector increased from 1.91 million in 2021 to 2.19 million in 2022, a 14.9 percent increase and an outstanding 58.2 percent Saudi workforce participation rate.
Succession in economic diversification:
Diversifying the economic base has been a pillar of Saudi Arabia’s strategy, and the tangible benefits are evident. The value of non-oil exports rose to SR315.7 billion in 2022, constituting 20 in excess of 20% of total exports. This demonstrates the kingdom’s determined efforts to reduce its reliance on hydrocarbon revenues and increase its presence in global markets.
Other Economies of the Club
Saudi Arabia’s growth to a trillion-dollar economy positions it in an elite group of countries. In 2021, 18 countries had GDPs greater than $1 trillion, led by the United States with an astounding $23 trillion economy, followed by China with $17.5 trillion and Japan with $4.9 trillion. In 2021, Saudi Arabia was the nineteenth-greatest economy, with a GDP of $834 billion.
Lastly, Saudi Arabia’s entry into the trillion-dollar club is more than just an economic milestone; it stands as a testament to the kingdom’s resolute commitment to economic transformation and the reduction of its energy dependency. The extraordinary growth rates, substantial contributions from the private sector, and diligent diversification efforts have all been instrumental in achieving this historic accomplishment.
With a strong vision, strategic planning, and the successful implementation of economic reforms, Saudi Arabia not only joins the ranks of trillion-dollar economies but also serves as an illustrative model for other nations seeking to diversify their economies and achieve sustainable economic growth.