Saudi Arabia’s Economy Grows 3.4% in Q1 2025, Driven by Non-Oil Sector Expansion

Saudi Arabia’s economy expanded by 3.4 percent year-on-year in the first quarter of 2025, bolstered by strong growth in non-oil sectors, according to new figures released by the General Authority for Statistics (GASTAT). The Kingdom’s seasonally adjusted real GDP also rose 1.1 percent compared to the previous quarter, signaling steady economic momentum.

The latest data shows that the non-oil sector remains the primary engine of growth, recording a 4.9 percent annual increase. In contrast, oil-related activities contracted by 0.5 percent year-on-year, reflecting ongoing volatility in global energy markets. Government services and net taxes on products also made positive contributions to GDP, adding 0.5 and 0.2 percentage points respectively.

According to GASTAT, sectors such as wholesale and retail trade, restaurants, and hotels led non-oil growth with an 8.4 percent annual rise. The transport, storage, and communication sector followed closely, expanding 6 percent, while finance, insurance, and business services grew by 5.5 percent despite a slight quarterly dip.

The data underscores the success of Saudi Arabia’s Vision 2030 economic diversification strategy, which aims to reduce the Kingdom’s reliance on oil revenues. Major public and private sector investments are supporting the shift toward a more resilient, broad-based economy.

Gross fixed capital formation—a key indicator of investment—surged 8.5 percent year-on-year, while government expenditure increased by 5.2 percent. Private consumption also rose by 4.5 percent compared to Q1 2024, though it saw a minor decline from the previous quarter.

Saudi Arabia’s external trade position also improved, with exports jumping 12.3 percent quarter-on-quarter, while imports dropped by 10 percent, narrowing the trade deficit.

The economic expansion places Saudi Arabia in line with broader regional trends. The UAE projects 5–6 percent GDP growth in 2025, fueled by strong performance in sectors like technology, finance, and infrastructure. Conversely, Fitch Ratings recently revised Qatar’s 2025 GDP growth forecast downward from 2.9 to 2.6 percent, citing global economic headwinds.

While the International Monetary Fund (IMF) recently lowered its 2025 Saudi GDP forecast to 3 percent—down from a previous estimate of 3.3 percent—the outlook remains positive. Mastercard Economics, in a December 2024 report, predicted stronger growth at 3.7 percent, citing gains in tourism, entertainment, technology, and manufacturing.

The report also emphasized that Saudi Arabia’s economic transformation is being supported by ambitious mega-projects like NEOM, Qiddiya, and the Red Sea Project, as well as increased investment in renewables and digital infrastructure. As the Kingdom continues to leverage its fiscal strength and reform agenda, the non-oil sector is expected to play an increasingly vital role in shaping long-term economic resilience.