GDP grows 5% in 3Q as oil sector regains momentum

The Kingdom’s real GDP grew 5% y-o-y in 3Q 2025, according to flash estimates (pdf) from the General Authority for Statistics (Gastat). The growth was boosted by a strong rebound in the oil sector that has offset a slowdown in non-oil growth,

The oil sector posted the highest quarterly expansion in three years, with an 8.2% y-o-y growth in 3Q. Abandoning oil market price floor defense strategy for production restarts has reflecting positively on GDP growth numbers, TS Lombard’s MENA Economist Hamzeh Al Gaaod told EnterpriseAM. This shift in approach now makes oil a positive driver, despite varying narratives between the IEA and OPEC on oil global demand and the impacts of a potential supply glut next year, Al Gaaod added.

Non-oil activities expanded 4.5% y-o-y, and were the largest contributor to GDP growth in the third quarter, accounting for 2.6 percentage points. “This is more than half of the total, underscoring the broadening base of economic expansion beyond hydrocarbons,” Argaam Investment’s Head of Specialized Research Ahmed Ramzy told us. The balance signals that the Kingdom’s diversification efforts are reaping “tangible results” and enhancing economic resilience and global headwinds.

BUT- Rising oil output is masking a slowdown non-oil growth, “which is likely to persist against the backdrop of fiscal consolidation,” Capital Economics’ James Swanston wrote in a recent research note seen by EnterpriseAM. Oil activities made a positive contribution of 2.0 percentage points during the quarter.

On a quarterly basis: The kingdom’s seasonally adjusted real GDP edged up 1.4% q-o-q in 3Q 2025, largely powered by a 3.1% increase in oil activities. Non-oil activities also expanded 0.6%, down 0.2 percentage points from 2Q, while government activities rose by 0.7%.

Looking ahead: The Kingdom’s economy is forecast to continue its upward trajectory on an annual basis in 4Q, boosted by elevated oil production. “As de-facto leader of OPEC+, Saudi Arabia has approved the more cautious 137K bpd output increases for October and November,” with a similar hike expected to be announced today for December, Swanston said. Meanwhile the pace of quarterly expansion is anticipated to ease further after hitting its “weakest pace in a year” in 3Q, according to Swanston.

Capital Economics now sees the Saudi economy to expand by close to 5% this year, before softening to 4.3% in 2026, “as the non-oil slowdown continues amid fiscal tightening and the support from oil output increases fade,” Swanston said. Meanwhile, Arqaam Investment sees the Kingdom’s full-year growth approaching 4.5%, with the current trend continued through 4Q, Ramzy said.

Optimistic? The IMF raised its forecast for our GDP growth this year and next to 4.0%, marking an upward revision of 0.4 percentage points for 2025 and 0.1 percentage points for 2026 from the fund’s latest upgrade in July. The IMF’s upward revision followed a recent upgrade from the World Bank, raising the 2025 forecast by 0.4 percentage points to 3.2% from its previous forecast in June.