Saudi Arabia’s non-oil GDP expected to remain strong: S&P Global

Saudi Arabia's non-oil GDP growth is expected to remain strong in the medium term, backed by Vision 2030 boom in consumer spending, tourism, and construction, S&P Global Ratings said.

In its report, the agency added that Saudi Arabia's non-oil GDP has seen significant growth over the last decade, outpacing the growth of the oil sector. S&P Global explained that retail, government, and finance sectors led this growth. Despite some setbacks caused by recent oil production cuts, indicators suggest strong performance in the non-oil sector later this year.

The current figures show great potential for increased household consumption, which would raise the share of the non-oil sector in the economy. The low share of local consumption in GDP reflects the critical economic role played by the oil activities sector, which represented more than 30% of GDP in early 2024.

It pointed out that construction efforts related to megaprojects will boost domestic demand, with the total estimated costs of these Vision 2030 megaprojects exceeding $1 trillion, representing nearly 90% of Saudi Arabia's GDP.

The report stated that even if the scale of the NEOM project is reduced, the construction of megaprojects and the related spending will remain a key driver of growth over the next five years. However, its impact on GDP will be partially limited due to the corresponding increase in imports of construction materials and reliance on external parties.

Until 2030, local demand growth will be primarily driven by megaprojects, construction costs, and related investments. It also forecast a significant rebound in household spending due to the expected rise in disposable income among Saudi citizens and government initiatives to boost spending related to entertainment and tourism, S&P Global expected.