Saudi Arabia’s Economic Transformation in 2026
Saudi Arabia is entering 2026 with a strong momentum, driven by the ambitious goals of Vision 2030. Despite global economic growth slowing to around 3.1% and inflation easing to approximately 3.7%, as per IMF estimates, the Kingdom continues to focus on internal development and diversification.
The country is navigating through a period of heightened global uncertainty due to geopolitical tensions and protectionist policies. However, Saudi Arabia is placing its bets on robust domestic demand and an expanding non-oil economy to ensure more sustainable growth and reduce dependency on oil market fluctuations.
According to projections from the Finance Ministry, real GDP is expected to grow by 4.6% in 2026, with non-oil activities leading the charge. This trend reflects the rapid development of various promising sectors such as tourism, entertainment, industry, transport, and logistics, which have significantly increased their contribution to the overall output.
In 2024, non-oil activities reached a record SAR 2.6 trillion ($693 billion), growing by 6%. This marks a significant shift in the economic landscape of the Kingdom.
Continued Growth and Structural Shifts
Alongside this growth, there is a clear structural shift occurring on two fronts. First, digital transformation is gaining speed. Electronic payments accounted for 79% of individual transactions in 2024, while e-commerce sales surged by 64.3% by end-August 2025. Additionally, point-of-sale sales rose by 6.1%.
Second, the private sector and investment are playing an increasingly important role. The purchasing managers’ index stood at a robust 60.2 points in October 2025, indicating stronger demand, output, and hiring.
On the macroeconomic stability front, the 2026 budget statement forecasts inflation at 2%, supported by “flexible and balanced” fiscal policies that focus on spending efficiency, service quality, and the continued rollout of priority megaprojects.
Net foreign direct investment inflows reached SAR 46.5 billion ($12.4 billion) in the first half of 2025, showing a 29.2% increase. This highlights the sustained confidence in the business environment.
Expansion of Promising Activities
Economic indicators in 2025 extended the strong results of 2024. From the start of 2025 through the third quarter, real GDP grew by 4.1% year on year, driven by a 4.7% expansion in non-oil activities.
Quarterly growth in non-oil sectors reached 4.9% in Q1 and 4.6% in Q2, with wholesale and retail trade, restaurants and hotels up by 6.6%; finance, insurance, and business services up by 5%; and construction up by 3.8%. Preliminary estimates show non-oil growth of 4.5% in Q3.
Oil activities grew by 3.9% over the same period, reflecting market developments linked to a gradual phase-out of an additional voluntary cut of 2.2 million barrels per day from April to September 2025.
Government activities expanded by 1.9%, supported by faster execution of projects with lasting economic impact.
On the demand side, real private final consumption rose by 3.5% in the first half of 2025, buoyed by localization programs and an improving labor market. Non-government fixed capital formation increased by 4.6%, driven by a 5.2% rise in non-oil investment.
Labor Market, Tourism, and Trade
Labor market indicators improved further: overall unemployment fell to 3.2% in Q2 2025, while Saudi unemployment declined to 6.8%. Female participation reached 34.5%, and the number of Saudis employed in the private sector rose by 144,100 year on year to around 2.5 million.
Tourism played a pivotal role. Saudi Arabia ranked first globally in growth of international tourism receipts in Q1 2025 versus Q1 2019, and third in international arrivals, with a 102% increase, supporting the goal of welcoming 150 million visitors annually by 2030.
Average inflation from early 2025 through October hovered near 2%, with the full-year average expected around 2.3%. The goods trade balance posted a surplus of SAR 162 billion ($43.2 billion) through Q3 2025, aided by 17.7% growth in non-oil exports.
Imports rose by 10.4%, largely intermediate and capital goods. The travel account recorded a surplus of SAR 32.2 billion in the first half.
Finance, Markets, and Fiscal Policy
Banking assets exceeded SAR 4.9 trillion by September 2025, with credit above SAR 3.2 trillion. Corporate lending climbed by 19%, non-performing loans fell below 1.2%, and capital adequacy exceeded 19.6%. Equity markets saw 14 listings by end-September, rising institutional participation, and increased foreign ownership.
Preliminary estimates put the 2025 budget deficit at SAR 245 billion (5.3% of GDP), reflecting a flexible fiscal stance supporting transformation. Public debt stood near SAR 1.47 trillion by Q3, with reserves maintained at about SAR 390 billion.
