Saudi Arabia’s Economy Sees Robust Growth in Q2 2025, Driven by Non-Oil Sectors
The Saudi economy has shown a remarkable growth of 3.9 per cent in the second quarter of 2025, as estimated by government data released on Monday. This increase is primarily attributed to the non-oil sectors, which have demonstrated exceptional resilience and strength. The Saudi General Authority for Statistics reported that non-oil activity grew by an impressive 4.6 per cent compared to the same quarter last year.
Non-Oil Sectors Lead the Charge
The growth in non-oil sectors has been particularly noteworthy, with certain industries displaying remarkable progress. For instance, electricity, gas, and water showed the highest growth rate among all sectors. This upward trend can be attributed to various factors, including government initiatives aimed at promoting sustainable development and diversification of the economy.
Furthermore, finance, insurance, and business activities have also witnessed significant growth. These sectors have been at the forefront of Saudi Arabia’s efforts to establish itself as a major player in the global market. The robust performance of these industries is a testament to the country’s strategic vision for economic transformation.
Government Initiatives Driving Growth
The government’s ambitious Vision 2030 program, aimed at reducing oil dependency and promoting economic diversification, has played a crucial role in driving growth in various sectors. By investing heavily in tourism, entertainment, and sports, Saudi Arabia is making significant strides towards creating a more diversified economy.
Oil Sector Shows Signs of Recovery
The oil sector, often considered the backbone of Saudi Arabia’s economy, has also shown signs of recovery. Oil activities demonstrated a growth of 3.8 per cent in Q2 2025 compared to the same quarter last year. This upward trend is particularly notable when considering that oil prices have been volatile due to various global factors.
In fact, oil production has increased significantly, with Saudi Arabia leading the charge through its role as the de facto leader of OPEC+. The recent decision by OPEC+ to raise oil production by 137,000 barrels per day in October is a testament to this growth. While this increase may seem modest compared to previous months, it reflects the ongoing efforts to stabilize global oil markets.
Impact of Oil Prices on Saudi Economy
Despite these encouraging signs, the Saudi economy still faces challenges. The International Monetary Fund (IMF) has warned that Riyadh needs an oil price above $90 per barrel to balance its books. With prices currently trading at around $65 a barrel, there are concerns about the potential impact on the Saudi economy.
A sustained period of low oil prices could lead to decreased government revenues and increased fiscal deficits. The 2025 fiscal deficit is forecasted to be around 101 billion riyals ($27bn), highlighting the need for continued economic reforms and diversification efforts.
Long-Term Implications
The growth in non-oil sectors and oil production is a significant step towards achieving Saudi Arabia’s long-term goals. The country’s Vision 2030 program aims to reduce its dependence on oil revenues, which currently account for around 90 per cent of government income. By investing in various sectors and promoting economic diversification, Saudi Arabia can create a more sustainable and resilient economy.
The ongoing efforts to promote tourism, entertainment, and sports are crucial steps towards this goal. These industries have the potential to generate significant revenue and create new job opportunities, further reducing dependence on oil exports.
Conclusion
In conclusion, Saudi Arabia’s economy has shown a remarkable growth of 3.9 per cent in Q2 2025, driven primarily by non-oil sectors. While challenges remain, particularly with regards to oil prices, the country is making significant strides towards achieving its long-term goals. By continuing to promote economic diversification and invest in various industries, Saudi Arabia can create a more sustainable and resilient economy for generations to come.