The World Bank enthusiastically confirmed Saudi Arabia’s significant economic momentum for 2026-2027, driven powerfully by the robust expansion of the non-oil sector under the ambitious Vision 2030 framework. In its specialized report, “The Gulf’s Digital Transformation: A Powerful Engine for Economic Diversification,” the World Bank projected this vigorous growth will certainly persist across the Kingdom as non-oil activities continue expanding by an impressive 4% on average.
Crucially, the World Bank significantly lifted its forecast for Saudi Arabia’s real Gross Domestic Product (GDP) growth to 3.8% in 2025, marking a notable revision up from 3.2% recorded just last October. This major upward adjustment strongly affirms the Saudi economy’s exceptional resilience and its proven ability to effectively absorb various external volatility and market fluctuations.
Consequently, this demonstrates growing international confidence in the effectiveness of ongoing structural reforms strategically implemented through Vision 2030.
Non-Oil Activities Drive Overall 4.3% Expansion
Economic momentum now strengthens across both the oil and non-oil sectors, bringing overall real growth to an impressive average of 4.3% over the entire forecast period. Specifically, the World Bank showed that non-oil activities are consistently expanding by a strong 4% average while oil activities simultaneously grow by an estimated 5.4%. Furthermore, the government’s recently approved state budget for 2026 projects an even higher real GDP growth rate, targeting 4.6% for that crucial fiscal year.
Moreover, oil production activities saw a healthy 1.7% year-on-year growth during the first half of 2025, benefiting directly from the strategic phase-out of OPEC+ voluntary production cuts beginning in April 2025. At the financial level, the Kingdom successfully maintains the fiscal deficit between 2025 and 2027, which analysts project will remain at a manageable average of 3.8% of GDP.
Dynamic Labor Market and FDI Inflows
Non-oil activities expanded by 4.8% during the period, successfully maintaining the excellent performance observed throughout 2024, largely driven by the dynamic wholesale, retail trade, restaurants, and hotels sector. This critical sector recorded a strong 7.5% year-on-year growth in the first half of 2025, clearly consolidating hospitality and tourism’s role as powerful engines for economic diversification.
Furthermore, the labor market beautifully mirrors the stabilization within the real economy, rapidly becoming much more inclusive, especially for women in the workforce. Overall unemployment decreased by 0.7 percentage point between the first quarter of 2024 and the first quarter of 2025, remarkably dropping the female unemployment rate from 11.8% to 8.1%.
Finally, recent changes in foreign ownership regulations, coupled with continued structural reforms, represent positive and essential steps to significantly attract greater flows of Foreign Direct Investment (FDI) into the Kingdom.
