According to a recent analysis by global credit rating firm Moody’s, Saudi Arabia’s non-hydrocarbon real gross domestic product (GDP) is expected to grow between 5% and 5.5% annually from 2025 to 2027.
This growth, bolstered by heightened government spending, marks an improvement from the 4.6% growth observed in 2022-2023 and a significant rise from the 1.5% growth between 2017 and 2019.
The US-based credit rating agency highlighted that this forecast aligns with Saudi Arabia’s Vision 2030 goals, which aim to diversify the economy away from crude oil dependence.
The Kingdom plans to maintain high government spending, projected at about 30% to 32% of GDP during the 2025-2027 period, to support various economic diversification initiatives and social programs.
Increased capital expenditures are expected to contribute significantly to the non-oil sector growth and reduce the Kingdom’s vulnerability to global shifts away from fossil fuels.
Moody’s report also underscored potential risks, noting that fluctuations in oil prices and production could pose challenges to balancing economic diversification with fiscal stability.
The report stressed the crucial role of the Public Investment Fund (PIF) in mitigating these risks by supporting economic diversification during periods of lower oil prices.
In parallel, S&P Global’s recent forecast also supports a positive outlook for the Saudi economy, predicting a GDP growth of 1.4% for the current year and an acceleration to 5.3% in 2025.
This growth is anticipated to be driven by the Kingdom’s ongoing efforts to enhance the non-oil private sector and reduce oil revenue dependency. Additionally, potential rate cuts by the US Federal Reserve could further enhance growth fundamentals for emerging markets like Saudi Arabia, attracting more capital inflows and bolstering economic expansion.
