S&P Global has upgraded Saudi Arabia’s economic outlook to “positive” from “stable,” reflecting strong non-oil growth and resilience against oil sector volatility.
Saudi Arabia plans to boost investments in emerging industries like tourism, aiming to diversify its economy beyond the hydrocarbon sector. The kingdom’s long- and short-term foreign and local currency ratings remain at “A/A-1.”
Under the Vision 2030 initiative, Saudi Arabia is undergoing rapid economic and social changes. Investments are expected to drive consumption, particularly among its youthful population of over 35 million, and enhance sectors such as manufacturing, logistics, and mining.
In the long term, Saudi Arabia aims to create more jobs and increase workforce participation. However, risks include potential oil price drops, public finance impacts, supply constraints, skills shortages, and infrastructure development challenges.
The government’s projects, exceeding $1 trillion, require substantial funding, especially from the Public Investment Fund (PIF). A recalibration is underway to prioritize economically beneficial projects and manage timelines to prevent overheating and funding issues.
S&P forecasts a gradual execution of investments, with the government’s net asset position remaining strong through 2027. Despite OPEC+ cuts reducing oil production, overall economic growth is expected to reach 1.4% in 2024, up from a 0.8% contraction last year.
Construction for Vision 2030 projects and the services sector will likely see increased activity, driven by consumer demand and a growing workforce. Growth is projected to average 4.3% over 2025-2027.