If a Saudi spaceship slipped through a wormhole in the early 2000s and returned to Earth in 2025, its astronauts might struggle to recognize their own country.
Cut off from the world for more than two decades, they would return to Saudi cities where women drive freely, global corporations run regional headquarters, mega-projects redefine skylines, and a once oil-dependent economy pulses with new sectors and ambitions.
The non-oil sector of Saudi Arabia continues to grow. However, it’s a necessity to diversify and not a luxury for most oil-producing nations, and Saudi Arabia is setting some good transformation examples.
Speaking last week at Made in Saudi Expo 2025, Saudi Minister of Industry and Mineral Resources Bandar bin Ibrahim Al-Khorayef informed the audience that his country posted its strongest first-half performance in non-oil exports, US$81.87 billion in the first half of 2025, according to the Saudi Press Agency (SPA).
Al-Khorayef described the figure as the highest semiannual growth on record, reflecting the Kingdom’s ongoing efforts to diversify its economy, said the SPA report, adding that initiatives under Saudi Vision 2030 have bolstered non-oil exports by strengthening industrial capabilities, enhancing product quality, and expanding access to global markets.
By comparison, Saudi Arabia’s non-oil exports reached approximately US$137.3 billion in 2024, a record annual figure representing a 13 percent increase over 2023.
Summing up the status of the nation’s economy, Saudi Arabia’s General Authority for Statistics (Gastat) released the real GDP results for Q3 of 2025 earlier this month.
“Real GDP grew by 4.8 percent compared with the same period in 2024,” said Gastat in a statement. This increase is attributed to growth across all major economic activities, with oil activities rising by 8.3 percent, non-oil activities by 4.3 percent, and government activities by 1.4 percent year-on-year, according to the results.
The stats also showed that seasonally adjusted real GDP grew by 1.4 percent compared with Q2 of 2025. Oil activities recorded a 3.3 percent increase, non-oil activities grew by 0.6 percent, and government activities expanded by 1.1 percent quarter-on-quarter.
Most economic activities achieved positive annual growth rates. Petroleum refining activities recorded the highest growth during Q3 2025, reaching 11.9 percent year-on-year and 3.9 percent quarter-on-quarter, according to Gastat.
London-based World Economics estimates Saudi Arabia’s 2025 GDP at $2.781 trillion in PPP terms (Purchasing Power Parity) and an initial estimate of $2.895 trillion for 2026. This figure is 42 percent higher than the official estimate published by the World Bank.
Explaining its methodology, World Economics says it incorporates crucial factors often overlooked in official estimates. First, the size of the informal economy – it is estimated that 21 percent of Saudi Arabia’s economic activity occurs outside the formal sector.
Secondly, outdated GDP base year data – many countries use outdated base years for their GDP calculations, leading to an underestimation of economic growth. Saudi Arabia uses a 14-year-old GDP base year. By adjusting for these factors where required, World Economics provides a more accurate picture of Saudi Arabia’s true economic size and potential.
For reference, the official data reported Saudi Arabia’s GDP as $787 billion in 2015 constant prices and $1.083 trillion in current prices for 2024.
In the first week of December, Saudi Arabia approved its state budget for 2026 where it forecasted the narrowing of fiscal deficit as the country boost its non-oil business sectors to continue its economic diversification drive.
According to Minister of Finance Mohammed Aljadaan the Saudi government will continue with expansionary spending in the 2026 budget, highlighting the importance of stability and medium-term planning.
Total expenditure is expected to reach US$350 billion in 2026 and around US$378.3 billion in 2028, with revenues projected to grow, supported by accelerated economic growth.
Speaking to media discussing the budget, Aljadaan said: “Despite all spending on major strategies and projects, the government continues to focus on core services and their improvement to enhance services provided to citizens, including education, health, social services, and municipal services, which will reach US$142 billion in 2026.”
He stated that the phase of maximizing impact will begin at the start of next year and will require significant efforts from both the government and the private sector.
Addressing the skeptics of Saudi Arabia’s transformation, Aljadaan said the change witnessed by Saudi economy since the launch of Vision 2030 is not easy to achieve whether in terms of private sector investment as a percentage of GDP changing by 40 percent in a period of less than eight years since the actual implementation of the Vision’s programs began.
“It is extremely difficult to move the private investment share in GDP by 40 percent in such a timeframe, yet this has been achieved in the Kingdom, which indicates a very high level of confidence from investors in the Saudi economy,” he said.
Also, the contribution of non-oil activities is remarkable in terms of its growth and the level the Kingdom has reached, said Aljadaan, describing it as historic with the figure reaching 55.4 percent, and expressed expectation that the 2030 target will be met by the end of 2030 or even earlier.
About 1.2 million job opportunities have been created and launched through Saudi Vision 2030, which includes the increase in the number of micro, small and medium enterprises in the country from 500,000 entities a few years ago to 1.7 million establishments.
The minister also spoke about the sustainability phase and the significant growth achieved by the Public Investment Fund (PIF) in recent years, with its assets rising from US$40 billion to more than US$213 billion in a very short period, describing it as a major achievement, according to a report by SPA.
On project restructuring, Aljadaan said that when planning for a 15-year period, readiness must exist to respond to all variables that may arise during that timeframe. This means it is possible to scale down one project or expand another based on needs and developments. This was in response to the media reports about the scaling down of projects such as The Line.
Amid the challenges, the Saudi economy continues to be healthy. Credit rating agency Moody’s updated the Saudi Arabia’s credit opinion report earlier this month at “Aa3″ with a “stable” outlook. The agency highlighted that the Kingdom’s credit profile is underpinned by its large and prosperous economy, supported by its vast hydrocarbon resources, improving institutional effectiveness, and a robust government balance sheet.
While the Kingdom remains exposed to cyclical declines in oil prices and longer-term risks, continued progress in economic and fiscal diversification is expected to reduce its reliance on hydrocarbons and exposure to developments in the oil market, it said.
Moving forward, lower oil revenues will continue to pose challenges to the Saudi economy and its overall targets. Earlier this month, the International Monetary Fund (IMF) said that Saudi Arabia faces a new test: how to sustain reform momentum in an era of potentially lower oil revenues without slipping back into the stop-and-go cycles that followed past oil booms.
“The path forward is clear: diversification must continue through sustained reforms regardless of oil price developments,” said the IMF.
Public debt-to-GDP ratios remain low and foreign assets are still ample. However, as funding pressures linked to large investment projects rise, Saudi Arabia’s ability to anchor spending decisions within a consistent, multi-year framework will be vital for maintaining long-term sustainability, it said.
The IMF in its policy advisory note last week recommended a few steps for Saudi policymakers.
“The recent decision to reprioritize some large investment projects has helped focus spending on areas where it matters most, while also mitigating the risk of economic overheating.
“Prioritizing projects that promise high returns and adhering to established spending ceilings will be key. Over the medium term, continued non-oil revenue mobilization (which has doubled over the past five years), energy subsidy reform, and more efficient public spending will also play a critical role in achieving a sustainable fiscal path
“Further improving fiscal institutions – through continued prudent debt management and a proper strategy for managing sovereign assets and liabilities will help preserve fiscal strength and advance Saudi Vision 2030 goals,” it said.
In addition, strong financial sector oversight will help support healthy credit growth, especially as banks increasingly rely on short-term external funding.
Finally, sustaining Saudi Arabia’s growth momentum will increasingly depend on two engines: a skilled workforce and a vibrant private sector, according to the IMF.
“Ensuring that workers have the right skills, particularly in fast-growing sectors like technology and hospitality, where gaps are the most pronounced, will help meet the talent needs of emerging industries.
“At the same time, deeper reforms, including the steadfast implementation of recently enacted laws that ease access for foreign investors, will help foster an investor-friendly business environment and attract more private investment,” said the IMF policy note.
For now, 2025 has confirmed the direction of travel. The center of gravity of the Saudi economy is shifting. The challenge beyond this point is to keep momentum without stretching the fiscal position too far. How that balance is managed will determine whether Vision 2030 becomes a lasting economic transformation, or a costly but transitional chapter in the Kingdom’s development.
(The author is a senior journalist based in Toronto, Canada)
