Saudi economy collapsing, this is the main reason; India takes advantage of current situation

RIYADH: Saudi Arabia is facing another setback in its economy. In the fourth quarter of the financial year, the country's GDP faced a decline of 3.7 percent compared to the same quarter last year. The government states that the main reason for this is the decline in revenue from oil sales. The Government Statistics Authority confirms this.

General Authority for Statistics explained that oil revenue fell by 16.4% year-on-year, but non-oil and government revenue increased by 4.3% and 3.1% respectively. Saudi Arabia's total GDP has decreased by 0.96% in 2023 compared to 2022. The Saudi Ministry of Finance had said in December that the country's real GDP would grow by 0.03 percent in 2023. The ministry has estimated a 4.4% growth in GDP by 2024.

Saudi Arabia could produce 12 million barrels of crude oil, but currently produces only 9 million barrels. This is due to the increase in oil production by non-OPEC countries such as the United States and Brazil. This resulted in stabilization of oil prices. Oil revenues have declined as Saudi oil production has been reduced and oil prices have remained stable.

Saudi sees the solution to the problem is to become an oil-based economy. The new goal is to diversify Saudi's oil-based economy and develop the country as a tourism hub in the Middle East. Through this project, Mohammed bin Salman is trying to turn Saudi Arabia into a business and sports hub. Saudi Arabia has taken the decision to strengthen the economy which is dependent on other sectors as the use of oil is going to decrease in the future.

India is taking advantage of this situation. India is the third largest importer of crude oil in the world. In the wake of the Russia-Ukraine war, the United States and the European Union imposed restrictions on oil from Russia, and India started getting crude oil from there at a low price. India's increased oil imports from Russia have affected imports from Saudi Arabia and Iraq.

India is getting oil at a cheaper price than what it used to import from Iraq and Saudi Arabia. Iraq and Saudi Arabia have been importing crude oil to India for decades. About 16 percent of this is less per month due to increased imports from Russia.