Saudi Arabia flag Saudi Arabia: Economic and Political Overview

The economic context of Saudi Arabia

Economic Indicators

Saudi Arabia is the largest economy in the Middle East and the richest Arab country. The policy of large-scale public works undertaken by the authorities, as well as foreign direct investment and the soundness of the banking and financial system, have enabled the country to become the number one regional economy and one of the largest in the world. However, the economy of Saudi Arabia is almost entirely based on oil, with GDP growth being closely linked to real oil growth. After a recession in 223 (-0.8% of GDP) due to oil production cuts and lower oil prices, the kingdom returned to growth in 2024, with real GDP increasing 1.3% compared to the previous year, according to preliminary government data. Non-oil growth significantly outpaced overall GDP, rising by 4.3%, while oil activities declined by 4.5% and government activities grew by 2.6%. According to the IMF, overall GDP growth is projected to accelerate to 4.7% in 2025, assuming the 1 mbpd voluntary oil production cuts are gradually phased out from October 2024 to September 2025, with an average growth of 3.7% per year thereafter.

Concerning public finances, the 2024 budget deficit was officially estimated at 2.8% of GDP, up from 2% in 2023, as spending growth outpaced revenue growth, which was constrained by lower oil production in line with Opec+ commitments. In the 2025 state budget, authorities forecast a fiscal deficit of SAR 101 billion (USD 26.88 billion), as the kingdom continues spending on large-scale gigaprojects to diversify its economy away from oil. The deficit aligns with a preliminary government projection from September, representing about 2.3% of GDP. Fitch projects government debt to rise to 35.3% of GDP by the end of 2026, up from 29.8% at the end of 2024. Government deposits at the Saudi Central Bank (SAMA), including the current account and fiscal reserve, were estimated at 10.3% of GDP at the end of 2024. Contingent liabilities are rising as government-related entities (GRE), particularly the Public Investment Fund (PIF), increase borrowing, but remain small relative to GRE assets (PIF debt was 4.4% of its assets at the end of Q3 2024). Saudi Arabia's inflation in 2024 increased to 1.7% compared to the previous year, according to data from the General Authority for Statistics (GASTAT). The cost-of-living index stood at 111.30 points in 2024, based on the 2018 reference year, up from 109.45 points in 2023.

The standard of living in Saudi Arabia is one of the highest in the Middle East, with a GDP per capita (PPP) of USD 65,885 (IMF, 2024). According to the latest data available from the Saudi General Authority for Statistics,  unemployment among Saudis stood at 7.8% as of the third quarter of 2024, while the overall unemployment rate stood at 3.7%. The unemployment rate hit historic lows, with women’s labour force participation remaining well above the 30% target for 2030.

 
Main Indicators 2023 (E)2024 (E)2025 (E)2026 (E)2027 (E)
GDP (billions USD) 1,067.581,100.711,136.581,199.161,262.33
GDP (Constant Prices, Annual % Change) -0.81.53.34.13.6
GDP per Capita (USD) 32,53032,88133,28734,43135,534
General Government Gross Debt (in % of GDP) 26.228.330.631.933.1
Inflation Rate (%) 2.31.71.92.02.0
Unemployment Rate (% of the Labour Force) 3.80.00.00.00.0
Current Account (billions USD) 34.074.25-20.74-22.56-28.84
Current Account (in % of GDP) 3.20.4-1.8-1.9-2.3

Source: IMF – World Economic Outlook Database, October 2021

Main Sectors of Industry

Agriculture accounts for 2.7% of Saudi Arabia’s GDP and employs 3% of the active population (World Bank, latest data available). Because of geographical and climatic constraints (droughts), Saudi Arabia imports most of its agricultural and food product requirements. Water scarcity is a serious regional problem that the country is likely to face in the coming years, as the growing cultivation of wheat presents the threat of water depletion. Saudi Arabia is the largest market for agriculture in the GCC region; however, productivity remains limited compared with the public investment that funds the sector. According to Saudi Agriculture, the agricultural contribution to GDP amounted to about USD 31 billion in 2024.

The industrial sector represents 47% of the GDP and employs 16% of the workforce. It is dominated by non-manufacturing activities (oil drilling). The country has the largest oil reserves in the world and is also the largest producer and exporter of oil. Oil accounts for nearly 90% of exports and 70% of government revenues (and more than 40% of GDP). The share of the non-oil industrial sector has been increasing along with the economic diversification efforts of the Saudi authorities (although manufacturing currently represents only 15% of GDP). According to the General Authority for Statistics, the industrial production index rose by 2.1% year-on-year in December 2024, driven by growth in manufacturing activity and waste management services.

Lastly, services represent 44.9% of the GDP and employ 81% of the active population. This sector is mainly dominated by tourism, financial and banking services, and the insurance sector. Tourism generates very high revenues, thanks in particular to the Hajj, the pilgrimage to Mecca that takes place in the last month of the Islamic year, which all Muslims are expected to make at least once during their lifetime. In the first eight to nine months of 2024, Saudi Arabia ranked third globally for international tourist arrival growth, with over 61% (UN Tourism). Overall, the Kingdom recorded 30 million international arrivals in 2024, a new record, significantly up from 17.5 million visitors in 2019 when it first opened to international tourism. The Saudi government launched the “Financial Sector Development Program” as part of “Vision 2030”, aimed at enabling financial institutions to support the growth of the private sector, develop an advanced capital market and improve financial planning. Despite facing tighter liquidity, Saudi banks maintain healthy performance metrics: according to Fitch Ratings, strong gains in securities and trading boosted non-interest income for Saudi banks by SAR 1.4 billion in Q3 2024, driving a SAR 0.5 billion increase in combined profit to reach SAR 20 billion.

 
Breakdown of Economic Activity By Sector Agriculture Industry Services
Employment By Sector (in % of Total Employment) 2.7 20.0 77.3
Value Added (in % of GDP) 2.4 53.3 39.2
Value Added (Annual % Change) 3.9 12.8 4.3

Source: World Bank, Latest Available Data. Because of rounding, the sum of the percentages may be smaller/greater than 100%.

 

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Indicator of Economic Freedom

Definition:

The Economic freedom index measure ten components of economic freedom, grouped into four broad categories or pillars of economic freedom: Rule of Law (property rights, freedom from corruption); Limited Government (fiscal freedom, government spending); Regulatory Efficiency (business freedom, labour freedom, monetary freedom); and Open Markets (trade freedom, investment freedom, financial freedom). Each of the freedoms within these four broad categories is individually scored on a scale of 0 to 100. A country’s overall economic freedom score is a simple average of its scores on the 10 individual freedoms.}}

Score:
66/100
World Rank:
63
Regional Rank:
5


 

Business environment ranking

Definition:

The business rankings model measures the quality or attractiveness of the business environment in the 82 countries covered by The Economist Intelligence Unit’s Country Forecast reports. It examines ten separate criteria or categories, covering the political environment, the macroeconomic environment, market opportunities, policy towards free enterprise and competition, policy towards foreign investment, foreign trade and exchange controls, taxes, financing, the labour market and infrastructure.

Score:
6.71/10
World Rank:
42/82

Source: The Economist Intelligence Unit - Business Environment Rankings 2021-2025

 

Country Risk

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Sources of General Economic Information

Ministries
Ministry of Finance
Ministry of Economy and Planning
Ministry of Energy (in Arabic only)
Ministry of Commerce
Ministry of Environment, Water & Agriculture
Statistical Office
General Authority for Statistics
Central Bank
Saudi Arabian Monetary Agency (SAMA)
Stock Exchange
Saudi Stock Exchange (Tadawul)
Economic Portals
Economy watch
 

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Latest Update: February 2025