World Bank Raises Saudi Arabia’s 2025 Growth Forecast as GCC Rides Wave of Digital Transformation

The World Bank has revised its 2025 economic outlook for Saudi Arabia, lifting its growth forecast to 3.8 percent from an earlier estimate of 3.2 percent. The upgrade reflects stronger activity across both oil and non-oil sectors, alongside increasing investment tied to Vision 2030 reforms.

In its latest Gulf Economic Update, the institution said Saudi Arabia continues to benefit from low public debt despite a wider fiscal deficit and a rising debt-to-GDP ratio approaching 32 percent. The report highlighted renewed business activity and steady investment flows as key contributors to the improved outlook.

“Economic momentum is strengthening across oil and non-oil sectors,” the World Bank said, adding that changes to foreign ownership rules and ongoing reform efforts are expected to attract more investors into the Kingdom.

The bank noted that while every GCC state is pursuing diversification, countries that launched early and consistent reforms—such as Saudi Arabia—are seeing the strongest progress. Recent gains in Saudi Arabia and Kuwait were described as evidence that structural changes are beginning to take hold.

The Kingdom’s upgraded forecast comes amid broader economic acceleration across the Gulf region. The UAE is projected to lead with 4.8 percent growth in 2025, followed by Saudi Arabia. Bahrain is expected to expand by 3.5 percent, Oman by 3.1 percent, Qatar by 2.8 percent and Kuwait by 2.7 percent.

The report, titled The Gulf’s Digital Transformation: A Powerful Engine for Economic Diversification, assessed a decade of reform efforts and emphasized that hydrocarbons, while still central to state revenues, are playing a gradually reduced role in economic planning. Digital sectors have emerged as key drivers of diversification, backed by major investments in connectivity and computing.

Across the GCC, 5G coverage now exceeds 90 percent, supported by expanding networks of data centers and advanced computing systems. The World Bank said this infrastructure is strengthening the region’s readiness for artificial intelligence, singling out Saudi Arabia and the UAE as leading adopters with growing startup activity and strong government backing.

AI-related investment is rising rapidly, including in cloud infrastructure, GPUs and university programs aimed at developing specialist skills. The report noted that both countries rank among the highest globally for e-government services, although progress remains uneven across the region.

Safaa El Tayeb El Kogali, the World Bank’s division director for the GCC, said digital transformation and economic diversification are “essential for long-term stability and prosperity,” stressing that the region must address labor market pressures and environmental concerns as technology adoption accelerates.

The report also pointed to high levels of digital literacy across the Gulf, with more than 80 percent of residents in most countries possessing basic digital skills. Women’s participation in STEM fields now exceeds the global average, particularly in Saudi Arabia and the UAE, though gaps persist in some states.

To sustain momentum, the World Bank recommended advancing national vision strategies, supporting SMEs in adopting AI tools, expanding reskilling initiatives and strengthening regional cooperation to build a unified digital market.

It noted that digital platforms are already reshaping regional commerce by allowing businesses—including smaller firms—to reach global customers without the need for a physical storefront.