Saudi Arabia's Economic Pulse: Tracking Real GDP Growth
Riyadh, Saudi Arabia - Understanding the trajectory of Real Gross Domestic Product (GDP) is crucial to gauging the economic health and evolution of Saudi Arabia. As the Kingdom actively pursues its ambitious Vision 2030 plan, real GDP figures offer vital insights into the success of diversification efforts and the overall resilience of the economy.
Recent Performance: Non-Oil Sectors Driving Growth
Flash estimates from the General Authority for Statistics (GASTAT) indicate that Saudi Arabia's real GDP saw a growth of 2.7% in the first quarter of 2025 compared to the same period last year. This growth was primarily fueled by the continued expansion of non-oil activities, which surged by 4.2% year-on-year. Government services also contributed positively, expanding by 3.2%. This marks the 17th consecutive quarter of growth for non-oil activities, underscoring the sustained momentum in diversifying the Saudi economy away from its traditional reliance on hydrocarbons.
On a seasonally adjusted quarterly basis, real GDP grew by 0.9% in Q1 2025 compared to the fourth quarter of 2024. This was supported by a 4.9% jump in government activities and a 1.0% increase in non-oil sector output.
Looking back, revised data for the fourth quarter of 2024 showed an even stronger annual growth rate of 4.5%, an upward revision from the preliminary estimate of 4.4%. This was the fastest growth rate in two years, boosted by gains across all major economic sectors. For the full year of 2024, the Saudi economy expanded by 1.3%, rebounding from a contraction in 2023. This annual growth was driven by a 4.3% rise in non-oil activities and a 2.6% increase in government activities, which offset a 4.5% decline in oil activities.
Key Insights and Trends:
- Diversification in Action: The consistent and robust growth in the non-oil sector is a key indicator of the progress being made under Vision 2030. The contribution of non-oil activities to the Kingdom's GDP has reached 53.2% according to GASTAT's comprehensively updated GDP estimates.
- Oil Sector Dynamics: Oil-related activities have experienced some contraction, with a 1.4% decrease in Q1 2025 year-on-year and a 1.2% drop quarter-on-quarter (seasonally adjusted). This reflects ongoing oil production cuts under the OPEC+ agreement.
- Comprehensive GDP Updates: GASTAT has implemented a comprehensive update to its GDP calculations, aligning with international standards and enhancing data quality and transparency. This has led to a significant revision in GDP estimates for 2023, reflecting a more accurate picture of the evolving economic structure, particularly the expanding non-oil economy and growth in sectors like construction, wholesale and retail trade, restaurants and hotels, and transportation.
- Regional Context: The International Monetary Fund (IMF) notes that short-term growth in the Middle East is expected to be driven by the expansion of the non-oil sector. The IMF projects the region's economy to grow by 2.6% in 2025 and 3.4% in 2026. Their April 2025 forecast for Saudi Arabia's GDP growth in 2025 was 3%. Longer-term outlooks suggest a potential GDP annual growth rate around 3.0% in 2026 and 3.3% in 2027 for the Kingdom.
Looking Ahead:
The performance of Saudi Arabia's real GDP will continue to be shaped by the interplay of global oil market dynamics and the pace of non-oil sector development. The Kingdom's commitment to strategic investments in infrastructure, tourism, and other non-oil industries, as outlined in Vision 2030, remains central to its long-term economic narrative. Monitoring these real GDP indicators provides a clear lens through which to assess this ongoing transformation.
