Video|1 August 2024
MENA – Saudi Arabia’s economic growth contracted for four consecutive quarters
Elliot Garside
Assistant Economist
Economic Developments in the MENA Region
Saudi Arabia’s GDP fell by 0.4% y/y in Q2, largely due to the continuous decline in oil production. This marks the fourth consecutive quarter of contraction. Despite the weak oil sector, we expect GDP to expand by 1.5% this year, due to increased non-oil activity.
The UAE and Morocco have finalized a new agreement to enhance non-oil trade and investment by reducing tariffs, improving market accessibility, and developing renewable energy infrastructure. This will support the UAE’s non-oil trade balance over the medium term.
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For Gulf cities, the near-term outlook will be tied not only to the global macroeconomic backdrop, but also the progress of the diverse visions and strategies in the region. With the aim to diversify their economies and reduce the dependence on oil, Gulf states continue to invest in the non-oil economy and implement various reforms. That said, oil revenues remain key to funding diversification efforts.
The military escalation between Iran and Israel has ratcheted up fears of an expanded Middle East conflict. The threat of counter strikes by Israel is clearly heightened, but we think both sides will ultimately seek to avoid a costly all-out war.
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