Saudi Arabia's real GDP grew 3.9% y-o-y in the 2Q 2025, supported by a strong momentum in the non-oil sector, according to flash estimates (pdf) from the General Authority for Statistics (Gastat) Non-oil activities saw the strongest growth, surging 4.7% y-o-y, while oil activities increased 3.8% y-o-y and government activities recorded a modest 0.6% increase.

The breakdown: Non-oil activities made the largest contribution to GDP growth, accounting for 2.7 percentage points. Oil activities also made a positive contribution of 0.9 percentage points, while government activities added 0.1 percentage points and net taxes on products contributed 0.2 percentage points.

On a quarterly basis: the kingdom’s seasonally adjusted real GDP rose 2.1% q-o-q in 1Q 2025, largely fueled by a substantial 5.6% increase in oil activities, their biggest jump since 3Q 2021. Non-oil activities also expanded 1.6%, while government activities contracted by 0.8%.

The big picture: “This coincides with Opec+ beginning to raise output from April and the accelerated pace that the Kingdom pushed for from June,” Capital Economics’ James Swanston wrote in a recent research note seen by EnterpriseAM. The move to increase oil output by over 500k bpd through August and September will further boost oil GDP growth in 3Q 2025, CE projected.

The growth will continue over the second half of the year, with Saudi Arabia’s economic expansion set to accelerate on the back of increased oil output, Swanston said in the research note. Non-oil business activity in the Kingdom hit a three-month high in June, driven by expansions in new client demand and a surge in hiring.

BUT- Lower revenues from oil exports are likely to push the government towards fiscal consolidation, which has the potential to affect non-oil growth. “Faster growth in the oil sector will cause overall GDP to accelerate by more than other analysts expect this year, but this will mask a slowdown in the non-oil sector,” Swanston wrote.

ICYMI- The Kingdom’s oil exports dropped 21.8% y-o-y to SAR 59.3 bn in May, its lowest level since May 2021, stretching April’s downward trend.

GDP outlook in focus: The IMF recently raised its forecast for our GDP growth in 2025 to 3.6%, up 0.6 percentage points from its April projection. Growth for 2026 is also expected to rise to 3.9%, revised upwards by 0.2 percentage points. The World Bank maintained in June its growth forecasts for Saudi Arabia at 2.8% in 2025 and 4.5% in 2026, while a recent Reuters poll anticipates Saudi Arabia to record 3.8% growth this year.

REMEMBER- Gastat recently updated its nominal and real GDP historical data over 2011-2024 as part of a revision project that looks to better capture economic transformation with more detailed insights into the performance of key sectors in the economy. GDP growth during 1Q 2025 was revised upwards to 3.4% y-o-y, from the 2.7% figure reported back in May.

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