Saudi cost of living in line with swift economic progress: Mercer

The cost of living in Saudi Arabia is evolving in line with swift economic progress as the kingdom’s robust economic foundation holds promising prospects for growth and individual living standards even in the face of inflation.

The latest data from consulting firm Mercer shows that a key driver behind the changes in the country’s cost of living rankings in 2023 has been an increase in the cost of groceries and personal care items, which rose by 7 per cent and 5 per cent, respectively.

The consulting firm’s Cost of Living 2023 survey revealed that Riyadh and Jeddah have ascended the global rankings to the 85^th and 101^st spots, respectively. However, the two cities are still positioned among the more economically favourable globally for expatriates.

The data collected from expatriates living in compounds also indicated a modest 4 per cent annual increase in accommodation costs – significantly lower compared to the world’s costliest cities, with Singapore (2nd) registering average rent increases of 50 per cent.

Outside of the modest rise in housing costs in Saudi Arabia, Mercer said the cost of eating out at restaurants rose by 4 per cent. However, unlike much of the GCC region, the cost of utilities, transportation and leisure have remained at around the same level as last year.

Within the region, cities in Saudi Arabia compare well to those in other GCC countries, with Dubai’s rising rental costs making a significant impact on its ranking. Dubai, the Middle East business and tourism hub ranked 18^th, Abu Dhabi 43^rd, Manama 98^th and Doha 126^th.

Saudi economic progress

Meanwhile, Mercer said the world-leading GDP growth of 8.7 per cent, wage increases and a fast-growing non-oil economy are contributing to Saudi Arabia’s economic resilience.

Saudi Arabia’s GDP, crossed the $1tn mark for the first time in 2022, beating its estimates as higher oil prices boosted government revenues. Global benchmark Brent mostly traded above the $90 mark in 2022 and is expected to remain above $60 this year despite a looming recession.

“In 2022, Saudi Arabia recorded an 8.7 per cent growth in GDP and remains one of the world’s fastest-growing economies, keeping the country on-track to achieving the objectives laid out in Saudi Vision 2030,” said Najla Najm, partner and career business leader at Mercer Middle East.

“Sweeping pro-business reforms and a sharp rise in oil prices and production have facilitated strong economic recovery, with the oil sector as one of the main drivers of the country’s economic expansion, contributing at least 4.8 per cent of the kingdom’s overall growth in 2022.”

Mercer’s research shows that Saudi Arabia has witnessed strong growth in salary increments on the back of its robust economic development. Across the kingdom, salaries have grown by an average of 4.2 per cent, with the financial services sector seeing 5 per cent, the energy sector 4 per cent and the technology sector 4.3 per cent hikes.

The International Monetary Fund projected that Saudi Arabia’s economy will grow at the fastest pace in a decade as the receding effects of the pandemic, rising oil production/prices and an improving economy have improved the fiscal and external positions.

Read: Has cost of living gone up for expats in Dubai, Abu Dhabi?