{"id":103864,"date":"2026-01-08T00:00:00","date_gmt":"2026-01-08T00:00:00","guid":{"rendered":"https:\/\/enterpriseam.com\/ksa\/?p=103864"},"modified":"2026-01-08T04:13:28","modified_gmt":"2026-01-08T04:13:28","slug":"non-oil-economy-budget-deficit-cooling-inflation-the-2025-macro-mix","status":"publish","type":"post","link":"https:\/\/enterpriseam.com\/ksa\/2026\/01\/08\/non-oil-economy-budget-deficit-cooling-inflation-the-2025-macro-mix\/","title":{"rendered":"Non-oil economy, budget deficit, cooling inflation: The 2025 macro mix"},"content":{"rendered":"

Saudi Arabia\u2019s economy found its second gear in the back half of 2025<\/strong>, as a recovering oil sector began to complement a consistently growing non-oil economy, setting up the country\u2019s GDP to continue on an upwards trajectory. <\/p>\n

By the numbers:<\/strong> Real GDP growth accelerated to 4.8%<\/a> in 3Q 2025, compared to 3.9% in 2Q<\/a> and 3.4% in 1Q<\/a>. The sustained growth puts the Kingdom on track to hit the Finance Ministry\u2019s 4.4% full-year target, accelerating from an overall growth rate of 2.7% y-o-y in 2024<\/a>.<\/p>\n

How this compares to forecasts: <\/strong>The World Bank<\/a> and Fitch\u2019s BMI<\/a> have both penciled in GDP growth coming in at 3.8% this year. Meanwhile, the IMF<\/a> is more optimistic with its growth forecasts, expecting to see a 4.0% clip in 2025. <\/p>\n

Non-oil growth led the way <\/p>\n

The growth came despite a year of falling oil prices and was driven instead by the <\/strong>burgeoning non-oil economy.<\/strong> The oil sector took the lead in 3Q 2025 with a growth rate of 8.3% y-o-y, pushing the overall GDP to its highest level of the year. This uptick in oil GDP mirrors higher production levels as the Kingdom began unwinding Opec production cuts. <\/p>\n

This gave a massive boost to a non-oil economy that had already been doing the heavy<\/strong> lifting:<\/strong> Non-oil growth came in at 4.9% in 1Q 2025 and 4.6% during the second quarter of the year. For the non-oil private sector, expansion was also sustained throughout the year, peaking in February<\/a> with a seasonally adjusted purchasing managers index figure of 60.5, the second fastest level since September 2014. The PMI figure then averaged between 55-60 throughout the year and reached its second-highest reading of 60.2 in October<\/a>. <\/p>\n

\n

The budget tells a more complex story<\/p>\n

The deficit <\/strong>ballooned to SAR 88.5 bn in 3Q 2025<\/a><\/strong> \u2014 its highest in five years<\/strong> \u2014 driven by a 13% y-o-y drop in total revenues and a 6% rise in spending. The Finance Ministry repeatedly signaled that the deficit was a choice and that the government is willing to sustain higher deficits through 2028 to invest in the economy and unlock private-sector growth, as long as returns exceed borrowing costs.<\/p>\n

Meanwhile, inflation remained the macroeconomic success story of the year:<\/strong> Annual inflation came in at an average 2.0% through November, EmiratesNBD recently noted<\/a>, putting it just below the Finance Ministry\u2019s expectation of a 2.3% average annual rate for 2025. The contained inflation rate was also supported by Crown Prince Mohammed bin Salman approving a five-year rent freeze<\/a> in Riyadh. The major policy intervention effectively put a ceiling on the Kingdom\u2019s biggest inflationary pressure: Housing. <\/p>\n

(** Tap or click the headline above to read this story with all of the links<\/strong> to our background and outside sources.)<\/p>\n","protected":false},"excerpt":{"rendered":"

The GDP trend followed a clear accelerating trajectory during the first 3 quarters of 2025<\/p>\n","protected":false},"author":1,"featured_media":103865,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"newspack_ads_suppress_ads":false,"newspack_popups_has_disabled_popups":false,"newspack_sponsor_sponsorship_scope":"","newspack_sponsor_native_byline_display":"inherit","newspack_sponsor_native_category_display":"inherit","newspack_sponsor_underwriter_style":"inherit","newspack_sponsor_underwriter_placement":"inherit","ep_exclude_from_search":false,"_primary_brand":0,"newspack_featured_image_position":"","newspack_post_subtitle":"","newspack_article_summary_title":"Overview:","newspack_article_summary":"","newspack_hide_updated_date":false,"newspack_show_updated_date":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[4797],"tags":[27,10,4796],"brand":[],"newspack_spnsrs_tax":[],"class_list":["post-103864","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-year-in-review","tag-economy","tag-enterpriseam-ksa","tag-year-in-review","wpautop","entry"],"acf":{"mongo_id":"41cad768-aca3-4f16-85e4-f25c7332ddad","order":"4","is_powered_by":false,"story_type":"1","photo_url":"https:\/\/ent.news\/2025\/8\/1248.jpg","photo_position":"above","homepage_title":"","full_issue_title":"Saudi\u2019s 2025: The dual-engine economy hits its stride","related_issue":[103857],"teaser":"The GDP trend followed a clear accelerating trajectory during the first 3 quarters of 2025"},"yoast_head":"\nNon-oil economy, budget deficit, cooling inflation: The 2025 macro mix - 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