Saudi Arabia’s non-oil sector is projected to grow at a rate of 4.8 percent in 2024, according to a new report.
Riyad Capital, the investment arm of Riyad Bank, revealed that this growth is driven by the Kingdom’s growth-oriented fiscal policy.
The analysis noted that Saudi’s non-oil sector will accelerate further in 2025, with a projected expansion rate of 5.2 percent.
Riyad Capital noted, “We project continued solid growth for non-oil activities, fostered by a growth-oriented fiscal policy with a focus on increased investment spending, which will spur growth in the coming years.”
This follows a trend where non-oil activities experienced a rise of 5.6 percent and 4.4 percent in 2022 and 2023 respectively. Developing the non-oil sector is crucial for Saudi Arabia as it aims to reduce its dependency on oil through its Vision 2030 goals, the paper highlighted.
Overall economic growth outlook
The analysis also projects that Saudi Arabia’s overall economic growth is poised to rebound in the coming years. The nation’s gross domestic product (GDP) is expected to expand by 2.3 percent in 2024 and accelerate to 5.8 percent in 2025.
Fiscal and current account projections
Furthermore, the report suggests that Saudi Arabia’s fiscal deficit could shrink to 3 percent and 1.8 percent of GDP in 2024 and 2025 respectively. Additionally, the current account balance is expected to rise to 3.7 percent of GDP in 2024 and further expand to 4.9 percent of GDP in 2025, driven by higher projected oil export revenues.
On the inflation front, the report expects the rate in the Kingdom to decline to 2 percent in 2024 and witness a moderate acceleration to 2.4 percent in 2025.
Oil production and prices
Riyad Capital also expects Saudi Arabia’s oil production to reach more than 10 million barrels per day over the next 18 months. The report states, “We expect oil production to expand again above 10 mbd in the course of the next 18 months, with the better part of this increase taking place in 2025. Therefore, the oil sector GDP contribution will still be mildly negative in 2024 with –2.2 percent, but record substantial growth of 8.7 percent in 2025.”
Moreover, the analysis points out that global oil prices are expected to remain volatile but at elevated levels, with Brent crude to fall in a range between $80 and $90 in 2024 and 2025.
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