RIYADH: According to a report submitted by Moody’s, Saudi Arabia’s non-oil GDP is expected to grow between 5%-5.5% from 2025 to 2027, a rise from 4.6% recorded in 2022-2023. The growth is in line with the objectives of Vision 2030 which wants to diversify the economy by focusing more on non-oil revenue and reducing dependence on oil revenue. This economic shift will be supported by government spending, which is expected to remain high, between 30-32% of GDP, through 2025-2027.
The non-oil growth seems to be promising, however, there are risks of fluctuations in oil prices and production, according to Moody’s. These risks could disturb the balance between funding diversification projects and good fiscal health. Yet, Saudi Arabia’s Public Investment Fund is seen as a balancing force that could spare some of the economic damage from lower oil prices.
PIF’s role and strong private sector activity will provide diversification. Saudi Arabia’s emphasis on capital expenditure will reduce its exposure to the global change from carbon based energy resources.
A related analysis by S&P Global predicted Saudi Arabia’s overall GDP growth will be 1.4% in 2024 and a rise to 5.3% in 2025, due to the efforts put in to diversify the economy and a stronger non-oil private sector. The report also stated that the US Federal Reserve rate cuts would also increase capital flowing into emerging countries like Saudi Arabia as it would draw in more capital.
