The oil expansion reflects the kingdom’s leadership role in the producer-group efforts that gradually unwound production cuts this year, enabling output gains as global demand showed resilience. Non-oil activity, while growing at a more moderate pace, remains firmly on an upward trajectory, aligning with the broader strategic aim of reducing dependence on hydrocarbons under Vision 2030.
Non-oil sectors benefited from strong performances in electricity, gas and water distribution, wholesale and retail trade, and business services, where growth rates approached 6–7 % compared to the same quarter last year. Meanwhile, government activities made only a modest contribution, reflecting the public-sector’s slower pace amid large-scale private-sector expansion.
Market analysts say the Q3 figure surpasses earlier expectations for the kingdom, which had reported a 3.9 % year-on-year expansion in the second quarter. That prior result included non-oil growth of 4.6 % and oil growth of 3.8 % over the same period. The stronger Q3 outturn provides fresh evidence that Saudi Arabia’s recent policy shifts—from preserving oil prices to rebuilding production and enhancing private-sector dynamism—are beginning to gain traction.
Despite the strong quarterly headline, risks remain. The non-oil growth rate, while solid, continues to trail the high targets set under the diversification agenda. And while the oil sector’s rebound has lifted GDP, it leaves the economy exposed to commodity-price swings and demand shocks. External analysts note that the government must translate the output gains into sustainable employment and productivity improvements to ensure the growth is not just cyclical.
Externally, multilateral institutions have revised their outlooks for the kingdom’s economy. An international lender raised the 2025 growth forecast for the country, citing robust domestic demand and fiscal-led investment, while flagging that non-oil expansion must accelerate to support long-term resilience. Meanwhile, the producer-group’s decision to allow increased crude volumes underlines the shift in Saudi strategy from supporting prices through scarcity to driving revenue through scale.
The state’s pipeline of megaprojects and infrastructure initiatives remains a central pillar of the transformation drive. Several large-scale developments—including entertainment, tourism, and advanced manufacturing zones—are now advancing, raising expectations for the non-oil sector’s future contribution. Observers caution, however, that many of these projects carry long-term horizons and the fiscal demands are considerable, even though the kingdom’s debt remains relatively low relative to GDP.
In the labour market, private-sector hiring has picked up, especially in service industries, but the unemployment rate among nationals remains above desired levels, particularly for younger workers and women. The government has emphasised that the non-oil growth path must create meaningful jobs and raise participation rates to fully harness the demographic dividend.
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Saudi Arabia