GASTAT's data shows that the kingdom’s oil sector remained a primary driver, but the performance of non-oil industries also strengthened. The non-oil private sector’s contribution rose, bolstered by activities in construction, manufacturing, and services. As the government continues its efforts to diversify the economy away from oil dependency, such growth signals progress in the Vision 2030 agenda.
Oil-related activities expanded by 2.3% during the quarter, benefiting from a global surge in crude oil prices. Despite fluctuations in global markets, Saudi Arabia's strategic position as a key member of the OPEC+ group allowed it to capitalise on higher energy demands, securing strong revenue from oil exports. This growth follows the kingdom's successful maintenance of its output cuts in collaboration with other oil-producing nations, which has helped sustain prices at levels more favourable to its budget.
Non-oil sectors saw a notable performance, with the construction and real estate industries gaining traction due to significant government investments in infrastructure projects. The kingdom's push to increase private sector involvement in large-scale ventures, such as the NEOM megacity, continues to support economic diversification. Additionally, the manufacturing sector benefited from government-led initiatives aimed at boosting local production capabilities, especially in chemicals and plastics, aligning with Saudi Arabia's goal of becoming a regional industrial hub.
The services sector also performed well, particularly in retail, hospitality, and finance. The kingdom's increased domestic consumption, a byproduct of rising employment and higher wages, contributed positively to these industries. Furthermore, the government's focus on tourism, including the opening of more regions to international visitors and investments in the entertainment sector, supported the service-driven growth. The planned expansion of the Red Sea Project and other tourist-friendly initiatives are expected to boost the sector further.
Despite these positive results, some challenges persist. Global inflationary pressures, supply chain disruptions, and geopolitical tensions could threaten Saudi Arabia’s continued growth. However, the kingdom’s solid financial reserves and its ability to pivot through global crises have demonstrated a degree of stability in the face of global headwinds. Analysts suggest that while the first-quarter data is encouraging, the second half of the year may see volatility depending on external market conditions and domestic policy shifts.
The government’s fiscal policies have also played a role in sustaining this growth. Public sector spending has been central to the kingdom’s post-pandemic recovery strategy. Investments in healthcare, education, and renewable energy have increased, while subsidies and tax breaks for businesses have encouraged entrepreneurial activity.
While there are concerns about global economic slowdowns affecting Saudi trade relationships, especially with major partners such as China and the United States, the kingdom's efforts to foster stronger ties with emerging markets, particularly within the Asia-Pacific region, may help mitigate potential setbacks. Expanding trade relations through the Saudi Vision 2030 initiative is also seen as a long-term strategy for offsetting vulnerabilities tied to global energy transitions.
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Saudi Arabia