Saudi Arabia Economic Outlook
Regional powerhouse:
Saudi Arabia boasts the largest economy in the Middle East and North Africa (MENA) region, with a GDP of just over USD 1 trillion (around a quarter of the MENA total) and a population of over 30 million.
Oil sector dominance:Saudi Arabia holds the second-largest proven oil reserves of any country and is one of the world's top oil producers. Oil accounts for around 40% of Saudi Arabia's GDP. As a permanent and founding member of OPEC, Saudi Arabia plays an important role in the cartel's decision-making process. Since 2023, Saudi Arabia has cut oil production in line with other OPEC members and implemented additional voluntary cuts in a bid to stabilize oil prices. Decades of oil wealth have enabled the country to amass a huge sovereign wealth fund, which helps smooth the business cycle and ensures economic stability.
Diversification efforts:Under Crown Prince Bin Salman, the country has made concerted diversification efforts under its Vision 2030 plan, aiming to reduce its reliance on oil and expand into other sectors such as tourism, manufacturing, and technology. High-profile projects include the construction of the world's largest solar plant, building a futuristic USD 500 billion city in the desert, and the construction of the world's tallest building in Jeddah in a bid to spur visitor arrivals. Moreover, the country introduced a value-added tax in 2018 to diversify fiscal revenue, and has introduced reforms to liberalize the labor market.
Challenges:Notwithstanding diversification efforts, the country remains reliant on oil for a large share of government revenue, making it vulnerable to oil price swings. Moreover, female labor force participation—though it has roughly doubled in the last few years—is low, and the neighboring UAE is generally considered to be a more attractive place for foreigners to settle and do business. Moreover, the government's push to establish new economic sectors could lead to economic waste.
Saudi Arabia's economic outlook:GDP growth over the next several years will likely be driven by the non-oil sector thanks to the government's diversification drive, with the oil sector likely to exhibit a more volatile performance that will depend on changes to OPEC quotas.
Saudi Arabia's Macroeconomic Analysis:
Nominal GDP of USD 1,107 billion in 2022.
Nominal GDP of USD 1,067 billion in 2023.
GDP per capita of USD 34,410 compared to the global average of USD 10,589.
GDP per capita of USD 32,514 compared to the global average of USD 10,589.
Average real GDP growth of 2.4% over the last decade.
Average real GDP growth of 2.9% over the last decade.
Sector Analysis
In 2021, services accounted for 52% of overall GDP, manufacturing 13%, other industrial activity 33%, and agriculture 2%. Looking at GDP by expenditure, private consumption accounted for 41% of GDP in 2021, government consumption 24%, fixed investment 24%, and net exports 11%.International trade
In 2020, manufactured products made up 20% of total merchandise exports, mineral fuels 68%, food 2%, ores and metals 2% and agricultural raw materials 0%, with other categories accounting for 8% of the total. In the same period, manufactured products made up 72% of total merchandise imports, mineral fuels 3%, food 15%, ores and metals 3% and agricultural raw materials 1%, with other goods accounting for 6% of the total. Total exports were worth USD 411 billion in 2022, while total imports were USD 176 billion.Main Economic Indicators
Economic growthSaudi Arabia's GDP growth over the last decade mirrored OPEC decisions on oil output and domestic economic reforms. The COVID-19 pandemic caused a sharp contraction, but recovery was underway by 2022, driven by the lifting of pandemic restrictions and successful economic diversification efforts boosting the non-oil economy. However, tough OPEC oil output cuts caused the economy to return to contraction in 2023. To read more about GDP growth in Saudi Arabia, go to our dedicated page.
Fiscal policy
Saudi Arabia's fiscal balance over the last decade mirrored global oil market trends and domestic economic reforms. The mid-2010s oil price crash led to significant deficits, which deepened further during the COVID-19 pandemic. However, a rise in oil prices and progress on economic diversification saw the fiscal deficit narrowing markedly post-pandemic. Find out more on our dedicated page.
Unemployment
Saudi Arabia's unemployment rate over the last decade was generally mild, but was high among the youth and women. By 2022, initiatives such as Saudization and investment in non-oil sectors started to positively impact the job market, causing the unemployment rate to fall to a roughly two-decade low. For more information on Saudi Arabia's unemployment click here.
Inflation
Over the last decade, Saudi Arabia's inflation rates were generally mild, dampened by government price controls and subsidies. That said, inflation spiked briefly in 2018 due to VAT implementation, and has been propped up post-Covid by higher international commodity prices and global supply constraints. Go to our Saudi Arabia inflation page for extra insight.
Monetary Policy
Saudi Arabia's central bank policy rates over the last decade largely mirrored the US Federal Reserve's decisions, due to the Riyal's peg to the US Dollar. This led to a period of low interest rates early in the decade. However, from 2017, as the Fed started raising rates, Saudi Arabia followed suit. Rates were cut in 2020 in response to the COVID-19 pandemic's economic impact. By 2022, rates began to rise again, aligning with global monetary tightening trends. See our Saudi Arabia monetary policy page for additional details.
Exchange Rate
Saudi Arabia has its currency pegged to the US Dollar. The peg ensured predictability, but also exposed the economy to fluctuations in the dollar and oil prices. During periods of low oil prices, especially around 2015 and 2020, there was pressure on the peg, but the Saudi Arabian Monetary Authority managed to maintain stability, reflecting the country's substantial foreign exchange reserves. For more info on the riyal, click here.
Economic situation in Saudi Arabia
GDP grew year on year for the first time since Q2 2023 in Q3, suggesting that the economy remains on the path to recovery. Annual GDP growth came in at 2.8%, up from minus 0.3% in Q2. Oil output expanded for the first time since Q1 2023, benefitting from a low base of comparison: An ongoing 10% cut to production was made in July last year. Meanwhile, the output of non-oil firms plus the government increased at a slower pace than in the prior quarter. Switching to Q4, our panelists see the economy accelerating, growing at the joint-fastest speed since Q4 2022; in October, oil output remained broadly stable, and conditions in the non-oil business sector improved at a faster clip compared to the prior three months, according to PMI data. That said, our panelists have trimmed their forecasts for Q4 over the past month after OPEC+ agreed to delay output hikes to January from December.Saudi Arabia Economic Forecasts
Projections out to 2034.53 indicators covered including both annual and quarterly frequencies.
Consensus Forecasts based on a panel of 29 expert analysts.
Want to get insight on the economic outlook for Saudi Arabia in the coming years? FocusEconomics collects projections out to 2034 on 53 economic indicators for Saudi Arabia from a panel of 29 analysts at the leading national, regional and global forecast institutions. These projections are then validated by our in-house team of economists and data analysts, and averaged to provide one Consensus Forecast you can rely on for each indicator. This means you avoid the risk of relying on out of date, biased or outlier forecasts. Our Consensus Forecasts can be visualized in whichever way best suits your needs, including via interactive online dashboards , direct data delivery and executive-style reports which combine analysts' projections with timely written analysis from our in-house team of economists on the latest developments in the Saudi Arabia economy. To download a sample report on the Saudi Arabia's economy, click here. To get in touch with our team for more information, fill in the form at the bottom of this page.
Saudi Arabia Economic Indicators
Frequently Asked Question about Saudi Arabia's Economy
What is the economic future of Saudi Arabia?
What is Saudi Arabia's main source of income?
What is the economic strategy of Saudi Arabia?
What are some challenges to Saudi Arabia's economy?
Saudi Arabia's economic outlook is promising, underpinned by its Vision 2030 strategy focused on diversifying from oil to a knowledge-based economy. Investments in non-oil sectors like tourism, technology, and renewable energy, along with business environment reforms to attract foreign investment, position the country for positive long-term growth and regional economic leadership despite near-term global challenges.
Saudi Arabia's main source of income is the export of oil, which accounts for nearly 90% of government revenue. The country holds about 15% of the world's proven oil reserves and is one of the world's largest exporters of crude oil. After decades of oil-driven growth, the government is now implementing strategies to diversify its economy.
Saudi Arabia's Vision 2030 strategy seeks to diversify its economy beyond oil, focusing on non-oil sectors like tourism, manufacturing, and technology. It aims to boost private sector growth, attract foreign investment, and enhance global competitiveness through reforms including privatization, educational enhancement, and infrastructure development.
Saudi Arabia's economy is held back by its dependence on oil and difficulties diversifying away from the resource, high youth unemployment, fiscal sustainability issues due to high spending and fluctuating oil revenues, and vulnerability to global economic downturns and geopolitical tensions affecting trade and investments.