Saudi Arabia’s Real GDP increased by 2.7% in the first quarter, driven by activity in the non-oil sector
Saudi Arabia’s real GDP grew by 2.7% in the first quarter compared to last year, according to early estimates. This growth was driven by the non-oil sector as the country works to reduce its reliance on fossil fuels and diversify its economy.
Saudi Non-Oil Activities
Non-oil activities grew by 4.2%, while government activities grew by 3.2%. On the other hand, oil activities decreased by 1.4%, according to data from the General Authority for Statistics (GASTAT) released on Thursday.
When adjusted for seasonal changes, Saudi Arabia’s real GDP grew by 0.9% in the first quarter compared to last year. This growth was mainly driven by a 4.9% rise in government activities and a 1.0% increase in non-oil activities. However, oil activities dropped by 1.2% compared to the previous quarter.
The government has updated its GDP data by improving its data collection methods.
GASTAT President Fahad al Dossari said this update was mainly because of a strong local demand for more detailed economic data. A major change in the update was increasing the importance of the non-oil sector to better match international standards and improve data quality.
Strong Private Sector
Private sector activity in Saudi Arabia stayed strong during the first quarter, according to Monica Malik, chief economist at Abu Dhabi Commercial Bank. She mentioned that stable oil prices likely helped boost the rise.
Malik expects a slowdown in government spending from the second quarter onwards due to lower oil prices, which may reduce government activity for the rest of the year.
Saudi Arabia needs hundreds of billions of dollars to fund its Vision 2030 plan, which aims to reduce the country’s dependence on oil. The plan focuses on growing the private sector, strengthening non-oil industries, and creating a more sustainable and innovative economy.
IMF Forecast
The International Monetary Fund (IMF) has revised its forecast for Saudi Arabia’s GDP growth to 3% in 2025, down from the previous estimate of 3.3%. The forecast for 2026 was also reduced to 3.7% from 4.1%. This downgrade is due to global challenges like trade tensions, policy uncertainty, and possible tightening of financial conditions, which could especially impact emerging markets. However, the IMF expects Saudi growth to pick up slightly in 2026 and notes that global inflation is expected to decrease.
Published: 2nd May 2025
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