Saudi Arabia’s current account surplus surges to $7.6 billion in Q1 2024, driven by strong service exports
Saudi Arabia has witnessed a remarkable increase in its current account surplus, which surged to $7.6 billion (SAR28.6 billion) in the first quarter of 2024. This represents a significant 75.46% rise from the previous quarter, primarily driven by robust services exports. According to data from S&P Global Market Intelligence, the country’s services exports reached $15.64 billion (SAR58.7 billion) in the three months ending March, marking the second-highest quarterly figure on record. This follows the peak of $16.47 billion (SAR61.7 billion) achieved in the second quarter of 2023, largely due to revenues from travel services associated with the Hajj pilgrimage.
Saudi Arabia has been actively working to diversify its economy away from oil dependency by bolstering its service sector, including travel and tourism. The expansion of the travel and tourism sector has been significant, with over a 32% increase in 2023, contributing a record $118.4 billion (SAR444.3 billion) to the Kingdom’s GDP, according to the World Travel and Tourism Council’s 2024 Economic Impact Research. This growth indicates that Saudi Arabia’s efforts to diversify its economy are yielding positive results.
S&P Global noted that the strong performance in services exports, driven by travel services, indicates a significant acceleration of tourism and travel revenues outside the traditional Hajj season. Despite this impressive growth, the current account surplus was somewhat tempered by a 1.2% decrease in oil exports during the first quarter of 2024 compared to the previous quarter. This decline in oil exports is attributed to voluntary production cuts by OPEC+ members, highlighting the ongoing challenges faced by the Kingdom’s oil sector.
Looking forward, S&P Global anticipates that Saudi Arabia’s current account surplus will be equivalent to 3.2% of GDP for the entirety of 2024, assuming that the country’s oil supply cuts remain in effect. The report emphasizes the importance of Saudi Arabia focusing on increasing exports of non-oil goods to further mitigate its reliance on oil, in line with the Vision 2030 initiative. This strategic shift is crucial for ensuring long-term economic stability and growth.
Additionally, tourism revenues have shown significant growth outside the Hajj season, which has traditionally been a major revenue driver for the country. This diversification within the tourism sector is a positive indicator of the Kingdom’s efforts to create a more resilient and varied economic base.
In summary, Saudi Arabia’s first-quarter results for 2024 reflect a robust performance in services exports, particularly in travel and tourism, contributing to a significant increase in the current account surplus. However, the decline in oil exports remains a challenge that the Kingdom must address through continued economic diversification efforts. The outlook for the remainder of 2024 remains positive, with a focus on boosting non-oil exports to sustain economic growth and stability.
