Saudi Arabia GDP Grows 3.4% in Q1 Led by Non-Oil Sector

Saudi Arabia's economy grew by 3.4% in the first quarter of 2025, exceeding earlier estimates, driven primarily by a 4.9% increase in non-oil activities and a 3.2% rise in government activities, while oil sector output declined slightly by 0.5%. This growth reflects the kingdom's ongoing economic diversification efforts under Vision 2030, with significant gains in sectors such as wholesale and retail trade, restaurants, hotels, transport, and communication. Despite the contraction in oil-related activities and lower oil prices around $60 per barrel, Saudi Arabia increased oil production, mitigating the impact on the economy and positioning itself as a key player in global energy markets. However, the kingdom faces a widening fiscal deficit, with the IMF estimating that oil prices need to exceed $90 per barrel for budget balance. Saudi Arabia is also moderating government spending priorities amid declining oil revenues, while continuing to invest in major projects like the 2029 Asian Winter Games and the 2034 World Cup to sustain long-term growth. The non-oil sector's performance highlights both the success and challenges of the kingdom's transformation into a diversified economic powerhouse.