Saudi Arabia Economic Outlook
Regional powerhouse:
Saudi Arabia boasts the largest economy in the Middle East and North Africa (MENA) region, with a GDP of just over USD 1 trillion (around a quarter of the MENA total) and a population of over 30 million.
Oil sector dominance:Saudi Arabia holds the second-largest proven oil reserves of any country and is one of the world's top oil producers. Oil accounts for around 40% of Saudi Arabia's GDP. As a permanent and founding member of OPEC, Saudi Arabia plays an important role in the cartel's decision-making process. Since 2023, Saudi Arabia has cut oil production in line with other OPEC members and implemented additional voluntary cuts in a bid to stabilize oil prices. Decades of oil wealth have enabled the country to amass a huge sovereign wealth fund, which helps smooth the business cycle and ensures economic stability.
Diversification efforts:Under Crown Prince Bin Salman, the country has made concerted diversification efforts under its Vision 2030 plan, aiming to reduce its reliance on oil and expand into other sectors such as tourism, manufacturing, and technology. High-profile projects include the construction of the world's largest solar plant, building a futuristic USD 500 billion city in the desert, and the construction of the world's tallest building in Jeddah in a bid to spur visitor arrivals. Moreover, the country introduced a value-added tax in 2018 to diversify fiscal revenue, and has introduced reforms to liberalize the labor market.
Challenges:Notwithstanding diversification efforts, the country remains reliant on oil for a large share of government revenue, making it vulnerable to oil price swings. Moreover, female labor force participation—though it has roughly doubled in the last few years—is low, and the neighboring UAE is generally considered to be a more attractive place for foreigners to settle and do business. Moreover, the government's push to establish new economic sectors could lead to economic waste.
Saudi Arabia's economic outlook:GDP growth over the next several years will likely be driven by the non-oil sector thanks to the government's diversification drive, with the oil sector likely to exhibit a more volatile performance that will depend on changes to OPEC quotas.
Saudi Arabia's Macroeconomic Analysis:
Nominal GDP of USD 1,067 billion in 2023.
Nominal GDP of USD 1,085 billion in 2024.
Nominal GDP of USD 1,237 billion in 2024.
GDP per capita of USD 35,036 compared to the global average of USD 10,589.
GDP per capita of USD 32,403 compared to the global average of USD 10,589.
GDP per capita of USD 32,514 compared to the global average of USD 10,589.
Average real GDP growth of 2.3% over the last decade.
Average real GDP growth of 2.3% over the last decade.
Average real GDP growth of 3% over the last decade.
Sector Analysis
In 2022, services accounted for 44.9% of overall GDP, manufacturing 14.8%, other industrial activity 37.6%, and agriculture 2.7%. Looking at GDP by expenditure, private consumption accounted for 40.0% of GDP in 2023, government consumption 23.3%, fixed investment 29.3%, and net exports 7.4%.International trade
In 2021, manufactured products made up 18.9% of total merchandise exports, mineral fuels 77.5%, food 1.4%, ores and metals 1.6% and agricultural raw materials 0.2%, with other categories accounting for 0.4% of the total. In the same period, manufactured products made up 68.7% of total merchandise imports, mineral fuels 4.8%, food 15.1%, ores and metals 2.9% and agricultural raw materials 0.8%, with other goods accounting for 7.7% of the total. Total exports were worth USD 305.40 billion in 2024, while total imports were USD 215.20 billion.Main Economic Indicators
Economic growthThe economy recorded average annual growth of 2.3% in the decade to 2024. The COVID-19 pandemic caused a sharp contraction, but recovery was underway by 2022, driven by the lifting of pandemic restrictions and successful economic diversification efforts boosting the non-oil economy. However, tough OPEC oil output cuts caused the economy to return to contraction in 2023. To read more about GDP growth in Saudi Arabia, go to our dedicated page.
Fiscal policy
Saudi Arabia's fiscal deficit averaged 4.2% of GDP in the decade to 2023. The mid-2010s oil price crash led to significant deficits, which deepened further during the COVID-19 pandemic. However, a rise in oil prices and progress on economic diversification saw the fiscal deficit narrowing markedly post-pandemic. Find out more on our dedicated page.
Unemployment
The unemployment rate averaged 5.7% in the decade to 2023. By 2022, initiatives such as Saudization and investment in non-oil sectors started to positively impact the job market, causing the unemployment rate to fall to a roughly two-decade low. For more information on Saudi Arabia's unemployment click here.
Inflation
Inflation averaged 1.6% in the decade to 2024. That said, inflation spiked briefly in 2018 due to VAT implementation, and has been propped up post-Covid by higher international commodity prices and global supply constraints. Go to our Saudi Arabia inflation page for extra insight.
Monetary Policy
Saudi Arabia's monetary policy rate ended 2024 at 5.00%, up from 2.00% a decade earlier. This led to a period of low interest rates early in the decade. However, from 2017, as the Fed started raising rates, Saudi Arabia followed suit. Rates were cut in 2020 in response to the COVID-19 pandemic's economic impact. By 2022, rates began to rise again, aligning with global monetary tightening trends. See our Saudi Arabia monetary policy page for additional details.
Exchange Rate
From end-2014 to end-2024 the riyal stayed on the same level vs the U.S. dollar.The peg ensured predictability, but also exposed the economy to fluctuations in the dollar and oil prices. During periods of low oil prices, especially around 2015 and 2020, there was pressure on the peg, but the Saudi Arabian Monetary Authority managed to maintain stability, reflecting the country's substantial foreign exchange reserves. For more info on the riyal, click here.
Economic situation in Saudi Arabia
After a sluggish Q1, the economy should now be enjoying what is likely to be a stretch of above-trend growth. In April, Saudi Arabia and its OPEC+ allies began to gradually unwind the 2.2 million barrel per day production cuts in place since late 2023. Since then, the group has agreed to fast forward the output hikes, tripling them for May–July. Saudi Arabia’s crude oil output rose 0.5% in April from March according to official data, and then by another 1.2% in May according to Bloomberg estimates. Regarding non-oil output, growth appears to have slowed to a more sustainable but still-rapid pace, supported by government diversification efforts. Business conditions in the sector improved the least in eight months in April, and only slightly more speedily in May. In other news, in May, the U.S. and Saudi Arabia penned a USD 600 billion investment deal.Saudi Arabia Economic Forecasts
Projections out to 2034.54 indicators covered including both annual and quarterly frequencies.
Consensus Forecasts based on a panel of 30 expert analysts.
Want to get insight on the economic outlook for Saudi Arabia in the coming years? FocusEconomics collects projections out to 2034 on 54 economic indicators for Saudi Arabia from a panel of 30 analysts at the leading national, regional and global forecast institutions. These projections are then validated by our in-house team of economists and data analysts, and averaged to provide one Consensus Forecast you can rely on for each indicator. This means you avoid the risk of relying on out of date, biased or outlier forecasts. Our Consensus Forecasts can be visualized in whichever way best suits your needs, including via interactive online dashboards , direct data delivery and executive-style reports which combine analysts' projections with timely written analysis from our in-house team of economists on the latest developments in the Saudi Arabia economy. To download a sample report on the Saudi Arabia's economy, click here. To get in touch with our team for more information, fill in the form at the bottom of this page.
Saudi Arabia Economic Indicators
Frequently Asked Question about Saudi Arabia's Economy
What is the economic future of Saudi Arabia?
What is Saudi Arabia's main source of income?
What is the economic strategy of Saudi Arabia?
What are some challenges to Saudi Arabia's economy?
Saudi Arabia's economic outlook is promising, underpinned by its Vision 2030 strategy focused on diversifying from oil to a knowledge-based economy. Investments in non-oil sectors like tourism, technology, and renewable energy, along with business environment reforms to attract foreign investment, position the country for positive long-term growth and regional economic leadership despite near-term global challenges.
Saudi Arabia's main source of income is the export of oil, which accounts for nearly 90% of government revenue. The country holds about 15% of the world's proven oil reserves and is one of the world's largest exporters of crude oil. After decades of oil-driven growth, the government is now implementing strategies to diversify its economy.
Saudi Arabia's Vision 2030 strategy seeks to diversify its economy beyond oil, focusing on non-oil sectors like tourism, manufacturing, and technology. It aims to boost private sector growth, attract foreign investment, and enhance global competitiveness through reforms including privatization, educational enhancement, and infrastructure development.
Saudi Arabia's economy is held back by its dependence on oil and difficulties diversifying away from the resource, high youth unemployment, fiscal sustainability issues due to high spending and fluctuating oil revenues, and vulnerability to global economic downturns and geopolitical tensions affecting trade and investments.