The trend in Nominal GDP (GDP calculated on current prices, and unadjusted by the effect of inflation) of Saudi Arabia over the period 1975 to 2021 is presented in Figure 1.
It is apparent from Figure 1 that nominal GDP exhibited an overall increasing trend.
Since 1975, the Nominal GDP was increasing and reached its maximum in 1981, however, a decrease in nominal GDP is evident during 1982-1987.
Major geopolitical events such as the Iranian Revolution of 1979, the 1980 Iran-Iraq war, and the Gulf War of 1990 can be marked as the primary reasons that depressed Saudi Arabia’s economy.
It regained its momentum and posted an exponential growth during 1988-2008 before the global economic meltdown occurred amid the Global Financial Crisis of 2007-08. After that, the economy experienced booms in 2014 and 2018, while it experienced a phase of depression in 2016 and 2020.
In a nutshell, it can be argued that the boom and bust in the economic cycles of Saudi Arabia are tightly linked with the global market conditions as the Saudi economy is dominated by oil production, and the impact of demand or supply-side shocks are inherent in the fluctuation in GDP.
Source: World Bank
Source: World Bank
The annual growth in the nominal GDP of Saudi Arabia is presented in Figure 2. It depicts the fluctuations in the growth rate of nominal GDP from 1976 to 2021.
Fluctuations followed the effect of global recessionary periods that are 1982, 1991, and 2009.
The growth rate of Nominal GDP touched 47 percent in 1980 after that it declined drastically and nominal GDP contracted by around 17 percent in 1982 due to the global crisis in 1982.
It continued posting a negative growth rate during 1982-1987.
Figure 2 revealed that the economy of Saudi Arabia faced the worst scenario related to its economic growth when its growth rate of nominal GDP reached its lowest in 2019, due to the global recession.
The economy of Saudi Arabia further faced negative growth rates in the periods 1993, 1988, 2001, 2009, 2015, and 2020. Except for these years, it faces positive growth rates of nominal GDP.
The trend in the real GDP (calculated at constant prices) of Saudi Arabia is provided in Figure 3 from 1968 to 2021. Since real GDP is calculated at constant (2015) prices, it showed a clearer picture of the output of the economy.
The graph below illustrates that the real GDP of Saudi Arabia follows the increasing trend.
It shows that the real GDP of Saudi Arabia started continuously increasing from 1968 till 1974 but due to the global recession in 1975 it went down this year.
The graph exhibits different phases of the economic cycles, for instance, the economy suffered from recession and started recovery in 1986.
From 1992 real GDP was almost stagnant till 2002, it started growing from 2003 onwards. It can also be observed that the economy contracted in real terms during the global recession of 2009.
The real GDP has been increasing since then till the emergence of the pandemic in the year 2019 however the economic rebound can be seen in subsequent years.
Source: World Bank
Source: World Bank
The growth patterns in the real GDP of Saudi Arabia from 1969 to 2021 are presented in Figure 4.
It shows that the economy posted its highest growth rate of around 58 percent in 1970, after that the growth rate declined and became negative in 1975 amid the global recession.
The real GDP contracted by around 21 percent in 1982 (lowest over the period considered) whereas it remained negative till 1985.
Overall, the graph shows the volatility of the growth of real GDP.
The economy suffered from negative growth rates also in 2009 due to the global recession.
Another episode of economic downturn can be seen in 2020 which was triggered by the COVID-19 pandemic although a sharp recovery can be seen in the subsequent years.
The time series of real GDP per capita from 1968 to 2021 for the economy of Saudi Arabia is presented in Figure 5.
It is evident that the real GDP per capita started increasing in 1968 sharply and reached its maximum in 1974.
The per capita real GDP declined severely since 1981 and the global recession in 1982 was one of the reasons for it. After that per capita GDP showed a minor fluctuating pattern.
The figure shows that the global recession in 2009 and the Covid pandemic affected the real GDP per capita GDP of Saudi Arabia.
Source: World Bank
Source: World Bank
The annual growth rates of per capita GDP from 1969 to 2021 for the economy of Saudi Arabia are presented in Figure 6.
The economy achieved its highest growth rate of per capita real GDP in 1970 and reached a growth rate, that is, 52.2 percent whereas it touched the lowest in 1982, that is, 25.6 percent.
The economy suffered from a negative per capita growth rate of real GDP also in 2009 amid the global economic downturn.
Similarly, the pandemic also derailed the per capita real GDP into a negative trajectory.
The time series of GDP deflator from 1969 till 2021 for the economy of Saudi Arabia is presented in Figure 7.
According to figure 7 the economy experienced highest price level in 1974 which is followed by another major spike of price level in 1980.
Figure 7 further depicts that the general price level of economy remained volatile with the GDP Deflator index turns out negative in years 1970, 1984, 1985,1986, 1988, 1998, 2009, 2015, and 2020.
Further, it is reflected by the below graph that Covid 19 pandemic also hit the GDP deflator (inflation), as in 2020 the economy suffered a negative value of GDP deflator that is approx. -8.69 precent.
Source: World Bank
Source: World Bank
The growth patterns in the real GDP of Saudi Arabia from 1969 to 2021 are presented in Figure 4.
It shows that the economy posted its highest growth rate of around 58 percent in 1970, after that the growth rate declined and became negative in 1975 amid the global recession.
The real GDP contracted by around 21 percent in 1982 (lowest over the period considered) whereas it remained negative till 1985.
Overall, the graph shows the volatility of the growth of real GDP.
The economy suffered from negative growth rates also in 2009 due to the global recession.
Another episode of economic downturn can be seen in 2020 which was triggered by the COVID-19 pandemic although a sharp recovery can be seen in the subsequent years.
The time series for GDP per person employed (constant 2017 PPP $) for Saudi Arabia is provided in Figure 9 below.
The overall decreasing trend can be seen from the figure which reflects the deteriorating overall economic wellbeing of workers. Alternatively, it implies the erosion of purchasing power of the average worker in Saudi Arabia.
Potential explanation for such trend could be the moderate economic outlook along with increase in supply of workers due to rapid increase in population.
Source: World Bank
Source: World Bank
Figure 10 depicts the time series of growth rate of GDP per person employed from 1991 till 2021.
Overall volatile pattern in growth can be seen during 1991 till 2021, however, a more frequent downturn can be observed over the said period.
Maximum growth rate achieved was in 2003 (i.e. 5%) whereas it touched the lowest in 2020 (i.e. -7%).
Years including 1999, 2002, 2009, and 2020 were the period of substantial negative growth whereas years including 2000, 2003, 2008, 2011, 2021 were the periods of positive economic growth.
Qatar
Saudi Arabia
United Arab Emirates