Saudi Growth Momentum To Hold As Non-Oil Sector Expands, Moody’s Says

RIYADH: Saudi Arabia’s economy is set to maintain solid growth in the coming years as non-oil activity strengthens and the Kingdom begins to unwind OPEC+ production cuts, Moody’s Investors Service said in a new report.  

The credit assessor, which rates Saudi Arabia at Aa3, said the grade reflects a large, wealthy economy supported by sizeable hydrocarbon reserves and a strong government balance sheet.  

The outlook builds on earlier analysis published in October, when Moody’s highlighted steady progress in the Kingdom’s diversification agenda under Vision 2030. 

The agency said then that Saudi Arabia is on track to sustain 4.5 percent to 5.5 percent annual non-oil growth over the next five to 10 years as major projects advance and private consumption remains firm. 

The latest update aligns with the government’s own projections. The Ministry of Finance, in estimates released on Sept. 30, forecast real GDP growth of 4.6 percent in 2026, driven by continued expansion in non-oil industries. 

In its latest report, Moody’s said: “Economic momentum remains solid, with non-hydrocarbon activity still robust.”  

It added: “Ongoing implementation of the large-scale projects and strong private consumption demand, with unemployment at record low levels, are supporting non-hydrocarbon activity, while the unwinding of OPEC+ oil production cuts that began in April this year will lead to growth in the hydrocarbon sector after two years of contraction on a calendar year basis.”  

Real GDP is expected to grow 4 percent in 2025, accelerating to 4.5 percent in 2026, according to the report. 

The agency also said that continued progress in economic diversification will gradually reduce the Kingdom’s dependence on hydrocarbons and its exposure to oil market fluctuations. 

“While the sovereign remains exposed to cyclical declines in oil prices and longer-term risks stemming from global carbon transition, continued progress on economic and fiscal diversification will, over time, gradually reduce its reliance on hydrocarbons and exposure to oil market developments,” said Moody’s.  

It added that advancing major diversification projects is expected to attract further private-sector investment and accelerate non-oil economic development beyond previous expectations. 

Reinforcing this momentum, Saudi Arabia’s Purchasing Managers’ Index rose to 60.2 in November, its second-highest level in more than a decade, signaling strong expansion in the non-hydrocarbon business sector.