The Kingdom of Saudi Arabia’s real Gross Domestic Product (GDP) grew by 3.4% in the first quarter of 2025, compared to the same period in 2024, according to recent data from the General Authority for Statistics.This figure represents an upward revision from the initial estimate of 2.7%, reflecting ongoing refinements in economic data analysis and the adoption of updated statistical methodologies aligned with international standards.

This economic expansion was largely fueled by a 4.9% surge in non-oil activities, underscoring the effectiveness of the Kingdom’s economic change program under Vision 2030.The non-oil sector contributed 2.8 percentage points to the overall GDP growth during the quarter.

Government activities also played a significant role, contributing 0.5 percentage points, followed by net taxes on products with a 0.2 percentage point contribution.

In contrast, oil activities experienced a 0.5% contraction, negatively impacting GDP by 0.1 percentage points. This decline reflects persistent pressures on the oil sector due to global market volatility and price fluctuations.

Trade and Hospitality Sectors Lead the Way

A detailed analysis reveals widespread positive growth across most economic sectors. The wholesale and retail trade sector, along with restaurants and hotels, led the expansion with an remarkable 8.4% annual growth rate. The transport, storage, and communications sector followed closely with a 6% increase, while the financial, insurance, and business services sector grew by 5.5%.

Total fixed capital formation saw an 8.5% increase, while governmental consumer spending rose by 5.2%. Final consumer spending also experienced growth, increasing by 4.5%.

Saudi Arabia’s investments in strategic areas such as artificial intelligence and renewable energy contribute effectively to enhancing economic transformation and reducing unemployment rates.

IMF Praises Diversification Efforts

The International Monetary Fund (IMF) has lauded Saudi Arabia’s economic performance, noting significant progress in diversifying its economy. jihad Aqour, Director of the Middle East and Central asia Department at the IMF, highlighted the Kingdom’s strategic investments in areas like artificial intelligence and renewable energy as key drivers of economic transformation and reduced unemployment.

While acknowledging that a decline in oil prices could reduce government revenues by 3.2% to 5% for every 10% decrease in barrel price, Azour noted that Saudi arabia’s adoption of a medium-term financial model has strengthened its financial stability and reduced its dependence on oil revenues.

Future Outlook Remains Positive

The Saudi Ministry of Finance projects a robust economic growth rate of 4.6% in 2025, followed by 3.5% in 2026, and 4.7% in 2027. This growth is expected to be fueled by increased contributions from non-oil activities and an improved investment climate.

These indicators suggest that the Kingdom is successfully navigating global economic challenges while implementing structural reforms to enhance the economy’s resilience and sustainability.