Official government data released on Sunday showed that Saudi Arabia's real gross domestic product (GDP) witnessed a major contraction of 4.3 per cent in the fourth quarter. The decline was primarily attributed to a sharp 16.2 per cent decrease in oil activity compared to the same period a year earlier, driven by substantial crude output cuts.

The General Authority for Statistics reported that the real GDP for the full year of 2023 contracted by 0.8 per cent, with oil activity witnessing a notable decline of 9 per cent. However, non-oil activity managed to register growth of 4.4 per cent.

Saudi Arabia's oil economy has been grappling with challenges as the kingdom extended a voluntary production cut of 1 million barrels per day until the year's end. This decision was made to proactively stabilize the market amid ongoing uncertainties.

Earlier projections had suggested a more moderate contraction of 3.7 per cent year-on-year in the fourth quarter. However, the actual figures underscore the significant impact of oil production cuts on the kingdom's overall economic performance.

(With Reuters inputs)