ECONOMY

SAUDI CONTINUES ITS TALE OF ECONOMIC RESILIENCE

Saudi Arabia’s real GDP grew 3.4% in the first quarter of 2025 compared to the same period last year, driven by a 4.9% increase in non-oil activities, in addition to a 3.2% growth in government activities, while oil activities recorded a decline of 0.5%. Meanwhile, seasonally adjusted real GDP rose by 1.1% compared to the fourth quarter of 2024, according to the latest data from the General Authority for Statistics (GASTAT).

The results offer strong indication of the non-oil sector’s vital contribution to annual real GDP growth, with 2.8 percentage points. Additionally, government activities and net taxes on products accounted for contributions of 0.5 and 0.2 percentage points, respectively.

Most economic activities achieved positive annual growth rates during the period, despite global trade tensions and uncertainties related to rising trade barriers globally. Wholesale and retail trade, restaurants, and hotels recorded the highest growth rates during the first quarter of 2025, reaching 8.4% year on year (yoy) and 0.7% quarter on quarter (qoq). 

RESILIENT ECONOMY

“Saudi Arabia’s economy has demonstrated strong resilience to shocks, with non-oil economic activities expanding, inflation contained, and unemployment reaching record-low levels,” the International Monetary Fund (IMF) said in its latest assessment.

A higher-than-budgeted fiscal stance in 2025 remains appropriate to prevent procyclicality that could exacerbate the growth impact of lower oil prices.

Addressing strong credit growth and associated funding pressures will be crucial in mitigating risks to systemic financial stability. Given the current heightened global uncertainty, continued efforts on structural reform are essential to sustain non-oil growth and drive economic diversification. 

Foreign direct investment (FDI) into the kingdom also rose sharply in the first quarter of 2025, with net inflows reaching SAR 22.2 billion, a 44% increase compared to SAR 15.5 billion in the first quarter of 2024, according to newly released government data. However, inflows dipped 7% from the previous quarter’s revised total of SAR 24 billion, according to the General Authority for Statistics (GASTAT). 

Total FDI inflows for Q1 2025 reached SAR 24 billion, up 24% year-on-year, though slightly below Q4 2024’s figure of SAR 25.6 billion. Meanwhile, FDI outflows stood at SAR 1.8 billion—down 54% from Q1 2024, but up 7% from Q4 2024. 

The figures underscore a robust investment environment in the Kingdom, even amid short-term quarterly fluctuations, as Saudi Arabia pushes forward with economic diversification under Vision 2030.

NON-OIL TRADE THRIVING

Saudi Arabia’s non-oil export performance strengthened in the first quarter of 2025, even as overall merchandise exports declined due to a drop in oil trade, according to the GASTAT. 

Non-oil exports, including re-exports, grew 13.4% yoy, while national non-oil exports (excluding re-exports) rose 9.0%. Re-exports alone saw a notable surge of 23.7% compared to Q1 2024, underscoring the kingdom’s growing role as a regional trade hub. 

Despite the strength in non-oil trade, total merchandise exports fell by 3.2% during the quarter, driven by an 8.4% decline in oil exports. As a result, the share of oil in total exports dropped from 75.9% in Q1 2024 to 71.8% in Q1 2025, reflecting the ongoing diversification efforts under Vision 2030.

Meanwhile, imports rose 7.3% yoy, narrowing the kingdom’s trade surplus by 28.0% compared to the same period last year. 

Chemical products remained the top category among non-oil exports, accounting for 23.8% of the total and growing by 8.1% over Q1 2024. They were followed by plastics, rubber, and related products, which made up 21.9% of non-oil exports and increased 10.4% yoy. 

On the import side, machinery, electrical equipment, and parts continued to dominate, representing 25.8% of total imports and registering a strong increase of 18.7%. Transportation equipment and parts followed, comprising 14.6% of imports and rising 17.3% compared to Q1 2024.

GLOBAL TRADING PARTNERS

China remained Saudi Arabia’s top trading partner, accounting for 15.7% of total exports and 26.6% of total imports during the quarter. India and Japan ranked second and third, with 9.8% and 9.3% of Saudi exports, respectively. Other key export destinations included South Korea, United Arab Emirates, Egypt, United States, Poland, Bahrain, and Taiwan, which together accounted for 67.6% of total exports. 

On the import side, the US and India followed China, with 7.9% and 5.5% of total imports, respectively. The rest of the top 10 import sources – UAE, Germany, Japan, Egypt, Italy, France, and the United Kingdom – collectively made up 64.8% of total imports. 

While the kingdom has cast a strong trade net and sought new trading partner globally, it has also forged closer trade ties with its closest neighbours. Saudi Arabia’s non-oil trade surplus with the GCC countries recorded an annual growth rate of 203.2% to more than SAR 2 billion in April. It soared to around SAR 3.511 billion from SAR 1.158 billion in the same month last year. 

According to preliminary data from the International Trade Bulletin for April, published by GASTAT, the total volume of non-oil trade, including re-exports, between Saudi Arabia and GCC countries amounted to around SAR 18.028 billion. This reflects a yoy growth of 41.3%, with an increase of SAR 5.271 billion from SAR 12.757 billion in April 2024.