Saudi Arabia’s FDI Inflows Rise 14.5% in Q2 Amid Economic Diversification Push

Saudi Arabia recorded a strong increase in foreign direct investment (FDI) inflows in the second quarter of 2025, reflecting continued confidence in the Kingdom’s reform-driven economy despite global uncertainties.

According to figures released by the General Authority for Statistics (GASTAT), net FDI inflows reached SR22.8 billion ($6.1 billion), up 14.5 percent from SR19.9 billion in the same period last year. The rise underscores the Kingdom’s efforts to attract long-term international capital as part of its Vision 2030 strategy, which seeks to diversify the economy beyond reliance on oil.

On a quarterly basis, however, inflows dipped 3.5 percent compared with SR23.7 billion in the first three months of the year, mirroring broader global headwinds that continue to dampen cross-border investment flows. GASTAT reported that the total volume of FDI inflows stood at SR24.9 billion in the second quarter, down 11.5 percent from SR28.2 billion a year earlier.

Meanwhile, outflows of foreign investment from Saudi Arabia fell sharply. Net FDI outflows dropped to SR2.1 billion, a 74.5 percent decline from SR8.2 billion in the second quarter of 2024, and 10.5 percent lower than the SR2.3 billion recorded in the first quarter of 2025.

The positive net inflow figure reflects the balance between incoming and outgoing capital, indicating that more international investment is being retained within the Kingdom. GASTAT defines FDI as cross-border transactions where a foreign investor holds at least 10 percent of the voting power in a Saudi company.

Saudi authorities have been pushing a series of reforms to attract greater international interest. These include opening up sectors such as tourism, technology, and renewable energy, as well as issuing new industrial licenses to bolster non-oil industries. In June, the government granted 83 industrial licenses and inaugurated 58 new factories valued at SR2.85 billion.

To further deepen capital markets, policymakers are reportedly considering easing the current 49 percent foreign ownership cap in listed companies—a move that could enhance the appeal of Saudi equities to global investors. Although no official decision has been announced, the proposal is being closely watched by market participants.

Large international firms have also begun strengthening their presence in the Kingdom. Earlier this year, Macquarie Asset Management signed preliminary agreements targeting infrastructure and energy projects, signaling growing appetite for opportunities in Saudi Arabia’s expanding non-oil sectors.

Regionally, Saudi Arabia faces stiff competition from the UAE, which attracted $45.6 billion in FDI in 2024—a 48 percent increase year on year—placing it among the world’s top 10 FDI destinations. Dubai alone registered a record 1,117 greenfield projects last year, further cementing its reputation as a global hub for investment.

While Saudi Arabia continues to secure large-scale strategic inflows, sustaining momentum will depend on investor confidence in regulatory stability, transparency, and the pace of diversification initiatives under Vision 2030.