RIYADH: Saudi Arabia’s non-oil sector showed strong growth in the first half of 2025, even though the Purchasing Managers’ Index (PMI) for July reflected a slight slowdown in expansion. The non-oil GDP growth rate was around 4.7% in Q2 2025, slightly lower than 4.9% in Q1, indicating steady growth in key sectors such as construction, hospitality, and private investment. The growth was supported by strong domestic demand and government initiatives that align with Vision 2030.
Although the manufacturing, retail, and services sectors remained strong, the PMI for July weakened compared to earlier months. However, the index was above the 50-point level, suggesting that economic activity is still on the rise. The employment rate in the non-oil sector rose at the quickest since May 2011, highlighting strong labour conditions.
The International Monetary Fund recently raised its GDP growth prediction for Saudi Arabia in 2025 to 3.5%. This is partly due to the ongoing strong performance of the non-oil sector and reduction of the oil production cuts by OPEC+. Moreover, non-oil revenues grew by 7% in Q2 2025 to SR149.9 billion ($39.9 billion), which now accounts for almost half of the total government revenue, indicating the success of diversification strategies.
Even with global uncertainties and cost pressures, Saudi Arabia’s efforts to diversify its economy and invest in non-oil sectors continue to be strong, helping to maintain growth and achieve broader economic transformation goals.
