Saudi Arabia, once known only for its unmatched oil production capacity, is now decisively diversifying and rewriting the narrative; at least recent economic data, indicators, and forecasts suggest the same, anchored in its ambitious Vision 2030 agenda. Take the latest data, which shows that Saudi Arabia’s non-oil private sector continued to expand.
The Riyad Bank Purchasing Managers’ Index (PMI) eased to 56.3 in January from 57.4 in December, its lowest reading in six months but still well above the 50-mark that signals expansion.
Business activity remained supported by new projects, steady domestic demand, and improving investor sentiment. New orders stayed strong, driven by domestic conditions and rising exports to GCC and Asian markets, even as global competition made overseas client acquisition tougher.
Economists say the moderation is less a slowdown and more a normalization. The underlying signal remains resilience: companies are hiring, investing, and executing projects, albeit with tighter cost discipline amid higher wages, fuel, and metals prices.
At the heart of this transformation is Vision 2030, Saudi Arabia’s sweeping economic reform program aimed at reducing oil dependence and expanding private-sector participation.
As of late 2025, non-oil activities accounted for roughly 56 percent of the Kingdom’s $1.3 trillion economy. Tourism, mining, renewable energy, advanced manufacturing, entertainment, technology, and logistics have emerged as priority sectors, attracting both domestic and foreign capital. Mega-projects, regulatory reforms, and rising investor confidence have helped crowd in private investment, while state-backed initiatives continue to de-risk early-stage development in new industries.
A quieter transition—with global implications
Unlike past oil cycles, Saudi Arabia’s current transformation is not being driven by crisis but by strategy. Oil still matters and will continue to anchor fiscal stability, but the Kingdom is deliberately building parallel engines of growth.
The result is an economy that is becoming broader, more export-diverse, and more resilient to energy price shocks. For global investors, trading partners, and policymakers, Saudi Arabia’s diversification is no longer a future promise; it is an unfolding reality.
The world’s largest oil producer is still pumping crude. But increasingly, it is also exporting machines, services, logistics, and ambition, reshaping its role in the global economy far beyond the oil barrel.
Growth powered by non-oil engines
Saudi Arabia’s real GDP expanded by 4.5 percent in 2025, according to official flash estimates, with growth accelerating to nearly 5 percent in the final quarter of the year. While oil activity rebounded sharply toward year-end, non-oil sectors have emerged as the most consistent contributor.
Data from the General Authority for Statistics shows non-oil activities contributed nearly 2.7 percentage points to overall GDP growth in 2025—outpacing oil’s contribution on a full-year basis. In the fourth quarter alone, non-oil sectors grew over 4 percent year-on-year, reflecting strength in services, manufacturing, logistics, and tourism-linked industries.
This structural shift is also reflected in international outlooks. The International Monetary Fund projects Saudi GDP growth of around 4 percent through 2026, while the World Bank expects growth to accelerate further in 2026 and 2027, supported by both hydrocarbon and non-oil momentum.
Exports tell the diversification story
Perhaps the clearest evidence of the Kingdom’s transformation lies in its trade data.
Non-oil exports, which include re-exports, jumped over 20 percent year-on-year in November, reaching nearly 33 billion riyal. Machinery, electrical equipment, and parts dominated the export basket, accounting for nearly a quarter of total non-oil exports and recording triple-digit growth in some re-export categories.
The share of non-oil exports relative to imports rose sharply, while oil’s share in total exports declined, an important signal for a country long dependent on crude revenues. India, China, the UAE, Singapore, and Bahrain now rank among the top destinations for Saudi non-oil goods, highlighting the Kingdom’s growing integration into Asian and regional supply chains.
Ports, airports, and logistics hubs from Jeddah Islamic Port to King Khalid International Airport have become central to this transition, supporting Saudi Arabia’s ambition to emerge as a global trade and logistics gateway.
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