Saudi GDP Growth Hits 3.9% in Q2 2025 Amid Broad Sector Gains
Saudi Arabia’s real GDP grew by 3.9% year-on-year in Q2 2025, signaling a resilient and increasingly diversified economy. The latest flash estimates from the General Authority for Statistics (GASTAT) show broad-based expansion across oil, non-oil, and government sectors, though with varying degrees of impact. The data reflects Saudi Arabia’s continued pivot toward non-oil growth engines while maintaining strength in its energy sector.
Non-Oil Sector Leads Saudi GDP Growth with 4.7% Surge
Non-oil activities surged by 4.7% year-on-year, contributing 2.7 percentage points to total GDP growth—making it the largest driver of Saudi GDP Growth this quarter. This sector includes manufacturing, retail, tourism, and financial services, all of which have benefited from policy reforms, infrastructure investments, and private sector expansion. The performance underscores the Kingdom’s progress in reducing its reliance on hydrocarbons and building a more balanced economic base.
Oil Sector Rebounds with 3.8% Annual Growth, 5.6% Quarterly Spike
Oil activities grew 3.8% year-on-year and posted a striking 5.6% quarter-on-quarter increase. While diversification is a long-term goal, oil remains a vital contributor, adding 0.9 percentage points to annual GDP growth and 1.3 points to quarterly gains. The quarterly spike reflects favorable global oil prices and increased output, reaffirming the sector’s role as a stabilizer amid global economic uncertainty.
Government Activities Flatline, Dragging Quarterly Growth
Government activities grew by just 0.6% year-on-year and declined 0.8% from Q1 2025, contributing minimally to Saudi GDP Growth. The sector added only 0.1 percentage points to annual growth and subtracted 0.1 points from quarterly gains. This stagnation may be due to seasonal fiscal adjustments or tighter budget execution, suggesting a need for more dynamic public sector strategies to support broader economic goals.
Seasonally Adjusted GDP Up 2.1% from Q1 2025
On a quarter-on-quarter basis, Saudi GDP growth reached 2.1%, driven primarily by oil (1.3 pp) and non-oil (0.9 pp) sectors. Government activities and net taxes on products both posted negative contributions of -0.1 pp. The seasonal adjustment methodology, based on TRAMO-SEATS and ARIMA models, filters out calendar effects like Eid holidays to reveal underlying economic trends.
What Do IMF Forecast Revisions Say About Future Saudi GDP Growth?
The International Monetary Fund recently upgraded its forecast for Saudi GDP Growth in 2025 to 3.6%, up from 3.0% in April. The 2026 projection was also raised to 3.9%, reflecting confidence in both oil revenue stability and non-oil sector acceleration. These revisions align with Q2’s performance and suggest continued resilience and adaptability in Saudi Arabia’s economic strategy.
Is Saudi GDP Growth Becoming More Balanced?
Q2 2025 data shows a more balanced contribution to growth. While oil remains significant, non-oil activities are increasingly dominant. The Kingdom’s economic transformation is gaining traction, with private sector dynamism and policy reforms driving sustainable growth. The mixed-sector performance highlights Saudi Arabia’s ability to navigate global headwinds while advancing its Vision 2030 objectives.
Also Read: Saudi Manufacturing Soars: $114B GDP and 6.3% Growth
