Saudi Economy Poised for Strong Non-Oil Momentum in 2026

A general view of the Saudi capital Riyadh. (SPA)
A general view of the Saudi capital Riyadh. (SPA)
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Saudi Economy Poised for Strong Non-Oil Momentum in 2026

A general view of the Saudi capital Riyadh. (SPA)
A general view of the Saudi capital Riyadh. (SPA)

Saudi Arabia enters 2026 amid an accelerating transformation driven by Vision 2030 targets, even as global economic growth slows to about 3.1% and global inflation eases to roughly 3.7%, according to IMF estimates.

With geopolitical tensions and protectionist policies heightening global uncertainty, the Kingdom is betting on robust domestic demand and a broader non-oil base to secure more sustainable growth and reduce exposure to oil-market volatility.

Finance Ministry projections point to real GDP growth of 4.6% in 2026, led by non-oil activities as the main engine of expansion. This momentum reflects the rapid development of promising sectors, from tourism and entertainment to industry, transport and logistics, which have lifted their contribution to output. In 2024, non-oil activities reached a record SAR 2.6 trillion ($693 billion), growing 6%.

Continued growth

Alongside growth, a structural shift is evident on two fronts. First, digital transformation is accelerating: electronic payments accounted for 79% of individual transactions in 2024, e-commerce sales surged 64.3% by end-August 2025, and point-of-sale sales rose 6.1%. Second, the private sector and investment are playing a larger role. The purchasing managers’ index stood at a robust 60.2 points in October 2025, signaling stronger demand, output and hiring.

On macro stability, the 2026 budget statement forecasts inflation at 2%, supported by “flexible and balanced” fiscal policies focused on spending efficiency, service quality and the continued rollout of priority megaprojects.

Net foreign direct investment inflows reached SAR 46.5 billion ($12.4 billion) in the first half of 2025, up 29.2%, underscoring sustained confidence in the business environment.

Expansion of promising activities

Economic indicators in 2025 extended the strong results of 2024. From the start of 2025 through the third quarter, real GDP grew 4.1% year on year, driven by a 4.7% expansion in non-oil activities.

Quarterly growth in non-oil sectors reached 4.9% in Q1 and 4.6% in Q2, with wholesale and retail trade, restaurants and hotels up 6.6%; finance, insurance and business services up 5%; and construction up 3.8%. Preliminary estimates show non-oil growth of 4.5% in Q3.

Oil activities grew 3.9% over the same period, reflecting market developments linked to a gradual phase-out of an additional voluntary cut of 2.2 million barrels per day from April to September 2025.

Government activities expanded 1.9%, supported by faster execution of projects with lasting economic impact.

On the demand side, real private final consumption rose 3.5% in the first half of 2025, buoyed by localization programs and an improving labor market. Non-government fixed capital formation increased 4.6%, driven by a 5.2% rise in non-oil investment.

Labor market, tourism and trade

Labor market indicators improved further: overall unemployment fell to 3.2% in Q2 2025, while Saudi unemployment declined to 6.8%. Female participation reached 34.5%, and the number of Saudis employed in the private sector rose by 144,100 year on year to around 2.5 million.

Tourism played a pivotal role. Saudi Arabia ranked first globally in growth of international tourism receipts in Q1 2025 versus Q1 2019, and third in international arrivals, with a 102% increase, supporting the goal of welcoming 150 million visitors annually by 2030.

Average inflation from early 2025 through October hovered near 2%, with the full-year average expected around 2.3%. The goods trade balance posted a surplus of SAR 162 billion ($43.2 billion) through Q3 2025, aided by 17.7% growth in non-oil exports.

Imports rose 10.4%, largely intermediate and capital goods. The travel account recorded a surplus of SAR 32.2 billion in the first half.

Finance, markets and fiscal policy

Banking assets exceeded SAR 4.9 trillion by September 2025, with credit above SAR 3.2 trillion. Corporate lending climbed 19%, non-performing loans fell below 1.2%, and capital adequacy exceeded 19.6%. Equity markets saw 14 listings by end-September, rising institutional participation, and increased foreign ownership.

Preliminary estimates put the 2025 budget deficit at SAR 245 billion (5.3% of GDP), reflecting a flexible fiscal stance supporting transformation. Public debt stood near SAR 1.47 trillion by Q3, with reserves maintained at about SAR 390 billion.



Saudi Arabia Allows Contracting Exceptions for Firms without Regional HQ

The King Abdullah Financial District in Riyadh (Asharq Al-Awsat)
The King Abdullah Financial District in Riyadh (Asharq Al-Awsat)
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Saudi Arabia Allows Contracting Exceptions for Firms without Regional HQ

The King Abdullah Financial District in Riyadh (Asharq Al-Awsat)
The King Abdullah Financial District in Riyadh (Asharq Al-Awsat)

Saudi Arabia has introduced greater flexibility into its investment environment, allowing government entities, under strict controls to safeguard spending efficiency and ensure the delivery of critical projects, to seek exceptions to contract with international companies that do not have regional headquarters in the kingdom.

The Local Content and Government Procurement Authority notified all government bodies of the mechanism to apply for exemptions through the Etimad digital platform.

The step is designed to balance enforcement of the “regional headquarters relocation” decision, in force since early 2024, with the needs of technically specialized projects or those driven by intense price competition.

Under a government decision that took effect at the start of 2024, state entities, including authorities, institutions and government-affiliated funds, are barred from contracting with any foreign commercial company whose regional headquarters in the region is located outside Saudi Arabia.

According to the information, the Local Content and Government Procurement Authority informed all entities of the rules governing contracts with companies that lack a regional headquarters in the kingdom and related parties.

Government entities may request an exemption from the committee for specific projects, multiple projects or a defined time period, provided the application is submitted before launching a tender or initiating direct contracting procedures.

Submission mechanism

In two circulars, the authority detailed how to submit exemption requests and clarified the cases in which contracting is permitted under the controls. It said the exemption service was launched on the Etimad platform in November 2025.

The service is available to entities that float tenders through Etimad. Requests for tenders launched before the service went live, as well as those issued outside the platform, will continue to follow the previously adopted process.

Etimad is the kingdom’s official financial services portal run by the Ministry of Finance, aimed at driving digital transformation of government procedures and boosting transparency and efficiency in managing budgets, contracts, payments, tenders and procurement. The platform streamlines transactions between state entities and the private sector.

Technical criteria

When issuing the contracting controls, the government made clear that companies without a regional headquarters in Saudi Arabia, or related parties, are not barred from bidding for public tenders.

However, their offers can only be accepted in two cases: if there is no more than one technically compliant bid, or if the offer ranks among the best technically and is at least 25% lower in price than the second-best bid after overall evaluation.

Contracts with an estimated value of no more than 1 million riyals ($266,000) are also exempt. The minister may, in the public interest, amend the threshold, cancel the exemption or suspend it temporarily.

More than 700 headquarters

More than 700 multinational companies had relocated their regional headquarters to Riyadh by early 2026, exceeding the initial target of attracting 500 companies by 2030. The program seeks to cement the kingdom’s position as a regional business hub and to localize global expertise.

When announcing the contracting ban, Saudi Arabia said the move was intended to incentivize foreign firms dealing with the government and its affiliated entities to adjust their operations.

It aims to create jobs, curb economic leakage, raise spending efficiency and ensure that key goods and services procured by government entities are delivered inside the kingdom with appropriate local content.

The government said the policy aligns with the objectives of the Riyadh 2030 strategy unveiled during the recent Future Investment Initiative forum, where 24 multinational companies announced plans to move their regional headquarters to the Saudi capital.

It stressed that the decision does not affect any investor’s ability to enter the Saudi economy or continue working with the private sector.

 


IMF Board to Review Staff-level $8.1 Bln Agreement for Ukraine

The city's downtown on a frosty winter day, amid Russia's attack on Ukraine, in Kyiv, Ukraine February 19, 2026. REUTERS/Alina Smutko
The city's downtown on a frosty winter day, amid Russia's attack on Ukraine, in Kyiv, Ukraine February 19, 2026. REUTERS/Alina Smutko
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IMF Board to Review Staff-level $8.1 Bln Agreement for Ukraine

The city's downtown on a frosty winter day, amid Russia's attack on Ukraine, in Kyiv, Ukraine February 19, 2026. REUTERS/Alina Smutko
The city's downtown on a frosty winter day, amid Russia's attack on Ukraine, in Kyiv, Ukraine February 19, 2026. REUTERS/Alina Smutko

The International Monetary Fund on Thursday said its board ​would review a staff-level agreement for a new $8.1 billion lending program for Ukraine in coming days.

IMF spokeswoman Jule Kozack told reporters that Ukrainian authorities had completed the prior actions needed to move forward with the request ⁠of a new ⁠IMF program, including submission of a draft law on the labor code and adoption of a budget.

She said Ukraine's economic growth in 2025 ⁠was likely under 2%. After four years of war, the country's economy had settled into a slower growth path with larger fiscal and current account balances, she said, noting that the IMF continues to monitor the situation closely.

"Russia's invasion continues to take a ⁠heavy ⁠toll on Ukraine's people and its economy," Kozack said. Intensified aerial attacks by Russia had damaged critical energy and logistics infrastructure, causing disruptions to economic activity, Reuters quoted her as saying.

As of January, she said, 5 million Ukrainian refugees remained in Europe and 3.7 million Ukrainians were displaced inside the country.


US Stocks Fall as Iran Angst Lifts Oil Prices

A screen displays a stock chart at a work station on the floor of the New York Stock Exchange (NYSE) in New York City, US, April 6, 2022. REUTERS/Brendan McDermid
A screen displays a stock chart at a work station on the floor of the New York Stock Exchange (NYSE) in New York City, US, April 6, 2022. REUTERS/Brendan McDermid
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US Stocks Fall as Iran Angst Lifts Oil Prices

A screen displays a stock chart at a work station on the floor of the New York Stock Exchange (NYSE) in New York City, US, April 6, 2022. REUTERS/Brendan McDermid
A screen displays a stock chart at a work station on the floor of the New York Stock Exchange (NYSE) in New York City, US, April 6, 2022. REUTERS/Brendan McDermid

Wall Street stocks retreated early Thursday as worries over US-Iran tensions lifted oil prices while markets digested mixed results from Walmart.

US oil futures rose to a six-month high as Iran's atomic energy chief Mohammad Eslami said no country can deprive the Islamic republic of its right to nuclear enrichment, after US President Donald Trump again hinted at military action following talks in Geneva.

"We'd call this an undercurrent of concern that is bubbling up in oil prices," Briefing.com analyst Patrick O'Hare said of the "geopolitical angst."

About 10 minutes into trading, the Dow Jones Industrial Average was down 0.6 percent at 49,379.46, AFP reported.

The broad-based S&P 500 fell 0.5 percent to 6,849.35, while the tech-rich Nasdaq Composite Index declined 0.6 percent to 22,621.38.

Among individual companies, Walmart rose 1.7 percent after reporting solid results but offering forecasts that missed analyst expectations.

Shares of the retail giant initially fell, but pushed higher after Walmart executives talked up artificial intelligence investments on a conference call with analysts.

The US trade deficit in goods expanded to a new record in 2025, government data showed, despite sweeping tariffs that Trump imposed during his first year back in the White House.