Saudi Arabia: Saudi Arabia’s first-quarter current account surplus widened to SR28.6 billion ($7.6 billion), up 75.46 percent from the previous quarter, driven by strong services exports, an analysis showed. 

According to S&P Global Market Intelligence, services exports in the three months to the end of March hit SR58.7 billion, the second-highest quarterly figure on record. This follows the peak of SR61.7 billion in the second quarter of 2023, driven by revenues from travel services related to the Hajj pilgrimage. 

Saudi Arabia has been strengthening its service sector, including travel and tourism, as the Kingdom pursues economic diversification efforts to reduce its longstanding dependency on oil. 

The country’s travel and tourism sector alone expanded by over 32 percent in 2023, contributing a record SR444.3 billion to the Kingdom’s gross domestic product, according to the World Travel and Tourism Council’s 2024 Economic Impact Research. 

In its report, S&P Global said: “Strong services exports, which are driven by travel services, are encouraging from the Saudi perspective as this signals a significant acceleration of tourism and travel revenues outside of the Hajj season, which took place in June.”   

However, the report noted that despite a strong result for the current account, it was dampened by a 1.2 percent decrease in Saudi Arabia’s oil exports in the first quarter of this year compared to the previous three months. 

This decline in the Kingdom’s crude exports can be attributed to the voluntary oil production cuts adopted by members of the Organization of the Petroleum Exporting Countries and their allies, known as OPEC+. 

In March, Saudi Arabia announced the extension of its 1 million bpd cut, initially implemented in July 2023, until the end of 2024.  

“The current account result for the first quarter is in line with our expectation for the entire year of 2024, which calls for a current account surplus equivalent to 3.2 percent of the gross domestic product. The forecast rests on the assumption that Saudi Arabia’s oil supply cuts will remain in place for the rest of 2024,” added S&P Global.  

According to the analysis, non-oil exports continued to perform moderately in the first quarter and did not change significantly compared to the previous quarter or in the year-over-year term.  

The report also highlighted that Saudi Arabia should put more efforts to increase exports of non-oil goods, aiming to reduce dependency on oil as outlined in Vision 2030. 

“The relatively modest performance of non-oil goods exports signals more efforts are still needed to reduce Saudi exports’ dependence on oil,” concluded S&P Global.