Saudi Economy Expands 3.9% in Q2 as Non-Oil Sectors Drive Growth

Saudi Arabia’s economy grew 3.9 percent in the second quarter of 2025, powered largely by an expansion in non-oil activity, according to preliminary figures released on Monday by the General Authority for Statistics.

Non-oil sectors advanced 4.6 percent compared with the same quarter last year, underscoring the Kingdom’s efforts to diversify its economy under the Vision 2030 transformation program. Utilities led the gains, with electricity, gas and water showing the fastest growth, followed by finance, insurance and business services.

Oil activities also contributed positively, expanding 3.8 percent year-on-year. Compared with the first quarter of 2025, oil activity posted an even stronger gain, rising 5.6 percent. Government-related services edged up just 0.6 percent during the period.

The figures come a day after Saudi-led OPEC+ announced a fresh increase in production quotas starting in October, adding 137,000 barrels per day (bpd). The planned rise is smaller than the group’s previous monthly adjustments, which added more than half a million bpd in August and September.

Saudi Arabia, the de facto leader of OPEC+, has been gradually raising output to recover market share lost during earlier supply cuts. But the increases have coincided with a softening in oil prices, which have fallen about 15 percent so far this year. Benchmark crude is currently trading at around $65 per barrel, supported partly by Western sanctions on Russia and Iran.

The International Monetary Fund (IMF) has warned that lower oil prices could pressure Riyadh’s fiscal position. The IMF estimates Saudi Arabia requires prices above $90 per barrel to balance its budget. The Kingdom is already forecasting a deficit of about 101 billion riyals ($27 billion) for 2025.

Despite those challenges, the government remains committed to its ambitious Vision 2030 agenda, which aims to diversify revenue streams away from oil. Billions of dollars are being invested in sectors such as tourism, entertainment, sports, and advanced industries to spur private sector growth and create jobs.

Economists say the robust performance of non-oil activity in the second quarter reflects early progress in these diversification efforts. The utilities sector, in particular, has benefited from large-scale infrastructure projects, while financial services are gaining momentum as the Kingdom deepens capital markets and expands insurance coverage.

Still, oil remains a critical driver of overall growth, and the outlook for the second half of the year will depend heavily on global energy markets. Any further decline in crude prices could weigh on both GDP growth and fiscal balances, limiting Riyadh’s room to maneuver as it pursues large-scale investment projects at home and abroad.

For now, the second-quarter results highlight a delicate balance: a non-oil economy showing resilience, but one still tied to the fortunes of the oil market that underpins Saudi Arabia’s finances.