Saudi Arabia's economic resilience shines in Q1 2025
According to estimates by the General Authority for Statistics, Saudi Arabia's real gross domestic product grew by 3.4 percent in the first quarter of 2025 compared to the same period in 2024.
On a seasonally adjusted basis, real GDP rose by 1.1 percent compared to the fourth quarter of 2024. Non-oil activities grew by 4.9 percent year-on-year and 1 percent quarter-on-quarter. Government activities expanded by 3.2 percent year-on-year and 5.5 percent quarter-on-quarter.
In contrast, oil activities declined by 0.5 percent year-on-year and 1.2 percent from the previous quarter. Despite the drop in oil activities, most economic sectors recorded annual growth.
For example, wholesale and retail trade, along with restaurants and hotels, recorded the highest growth among non-oil sectors in Q1 2025, rising by 8.4 percent year-on-year and 7 percent quarter-on-quarter.
This was followed by transport, storage, and communication activities, which expanded by 6 percent year-on-year and 1.8 percent quarter-on-quarter.
Additionally, financial, insurance and business services grew by 5.5 percent compared to the same quarter last year, despite a slight quarter-on-quarter decline of 1 percent.
The growth in non-oil activities aligns with Saudi Vision 2030, which aims to boost non-oil revenues and diversify the economy to offset potential declines in oil income due to global price volatility or shifts in demand — especially in light of voluntary and mandatory production cuts by OPEC+.
As a result of government initiatives, non-oil activities now account for 53.2 percent of GDP, marking a significant step toward achieving the country's diversification goals.
The Kingdom's real GDP growth in Q1 2025 was primarily driven by strong non-oil activities, including government-led projects, despite a decline in the oil sector
Government activities are significantly contributing to the Kingdom's GDP growth through both direct economic output and broader support.
For example, gross fixed capital formation rose by 8.5 percent year-over-year and 7.3 percent quarter-on-quarter, while government final consumption expenditure increased by 5.2 percent year-over-year and 4.5 percent quarter-on-quarter.
Meanwhile, private final consumption expenditure grew by 4.5 percent year-over-year but declined by 1.7 percent quarter-on-quarter.
In trade, imports rose by 2.7 percent year-over-year but fell by 10 percent quarter-on-quarter. Exports, on the other hand, increased by 1.5 percent year-over-year and surged by 12.3 percent quarter-on-quarter.
The rise in fixed capital formation played a key role in supporting the Kingdom's economic performance in Q1 2025, aligning with the goals of Vision 2030 for economic diversification.
This growth reflects the government's continued investment in major infrastructure and development projects tied to Vision 2030, including New Murabba, Rua Al-Madinah, Soudah Peaks and other transformative ventures.
In conclusion, the Kingdom's real GDP growth in Q1 2025 was primarily driven by strong non-oil activities, including government-led projects, despite a decline in the oil sector.
This increase highlights the Kingdom's economic resilience and adaptability amid global declines in oil prices and production.
It also reflects the dynamism of the evolving economic landscape, propelled by momentum in non-oil sectors and supported by prudent government policies and strategic investments. Ultimately, this growth underscores steady progress toward achieving Vision 2030 objectives.
Finally, it demonstrates the economy's agility in responding to global challenges and its ability to maintain balanced growth, which is essential for sustainable prosperity in the coming quarters.
• Talat Zaki Hafiz is an economist and financial analyst. X: @TalatHafiz
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