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.



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.


Gold Advances on US–Iran Tensions as Markets Weigh Fed Policy Path

UK gold bars and gold Sovereign coins are displayed at Baird & Co in Hatton Garden in London, Britain, October 8, 2025. REUTERS/Hiba Kola/File Photo
UK gold bars and gold Sovereign coins are displayed at Baird & Co in Hatton Garden in London, Britain, October 8, 2025. REUTERS/Hiba Kola/File Photo
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Gold Advances on US–Iran Tensions as Markets Weigh Fed Policy Path

UK gold bars and gold Sovereign coins are displayed at Baird & Co in Hatton Garden in London, Britain, October 8, 2025. REUTERS/Hiba Kola/File Photo
UK gold bars and gold Sovereign coins are displayed at Baird & Co in Hatton Garden in London, Britain, October 8, 2025. REUTERS/Hiba Kola/File Photo

Gold prices extended gains on Thursday after rising more than 2% in the previous session, as lingering tensions between the United States and Iran prompted a flight to safety, while investors evaluated the Federal Reserve's monetary policy path.

Spot gold rose 0.2% to $4,989.09 per ounce by 1227 GMT. US gold futures for April delivery held steady at $5,008.60.

"Geopolitical concerns are front and centre with reports that, if the US were to take military action against Iran, it could go on for several weeks," said Jamie Dutta, market analyst at Nemo.money, Reuters reported.

Some progress was made during Iran talks this week in Geneva but distance remained on some issues, the White House said on Wednesday.

FED LARGELY UNITED

Top US national security advisers met in the White House Situation Room on Wednesday to discuss Iran and were told all US military forces deployed to the region should be in place by mid-March.

Meanwhile, the Fed's January minutes showed it largely united on holding interest rates steady, but divided over what comes next, with "several" open to rate hikes if inflation remains elevated, while others were inclined to support further cuts if inflation recedes.

The weekly jobless claims data, due later in the day, and Friday's Personal Consumption Expenditures report, the Fed’s preferred inflation gauge, will provide further clues on the central bank's policy trajectory.

Markets currently expect this year's first interest rate cut to be in June, according to CME's FedWatch Tool.

Non-yielding bullion tends to do well in low-interest-rate environments.

Spot silver rose 0.9% to $77.87 per ounce after climbing more than 5% on Wednesday.

Silver is "supported by tight supply and low COMEX stock levels ahead of the delivery period of the March contract. However, given the extent of the historic correction earlier this month, silver is not back on safer ground until it trades back above $86," said Ole Hansen, head of commodity strategy at Saxo Bank.

Spot platinum fell 0.6% to $2,059.55 per ounce, while palladium lost 1.7% to $1,686.47.


Oil Prices Extend Gains on Concerns of Potential US-Iran Conflict

FILE PHOTO: The Phillips 66 Lake Charles Refinery is pictured in West Lake, Louisiana, US, June 12, 2018. REUTERS/Jonathan Bachman/File Photo
FILE PHOTO: The Phillips 66 Lake Charles Refinery is pictured in West Lake, Louisiana, US, June 12, 2018. REUTERS/Jonathan Bachman/File Photo
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Oil Prices Extend Gains on Concerns of Potential US-Iran Conflict

FILE PHOTO: The Phillips 66 Lake Charles Refinery is pictured in West Lake, Louisiana, US, June 12, 2018. REUTERS/Jonathan Bachman/File Photo
FILE PHOTO: The Phillips 66 Lake Charles Refinery is pictured in West Lake, Louisiana, US, June 12, 2018. REUTERS/Jonathan Bachman/File Photo

Oil prices rose on Thursday as the US and Iran attempted to ease a standoff in talks over Tehran's nuclear program while both sides heightened military activity in the key oil-producing region.

Brent futures climbed 23 cents, or 0.3% to $70.58 a barrel by 0735 GMT, while US West Texas Intermediate (WTI) crude gained 25 cents, or 0.4%, to trade at $65.44 a barrel.

Both benchmarks settled more than 4% higher on Wednesday, posting their highest settlements since January 30, as traders priced in the risk of supply disruptions in the event of ‌a conflict.

"Oil prices are ‌rallying as the market becomes increasingly concerned over the potential ‌for ⁠imminent US action ⁠against Iran," said ING analysts in a Thursday note.

Iranian state media reported the country had shut down the Strait of Hormuz for a few hours on Tuesday, without making clear whether the waterway had fully reopened. About 20% ⁠of the world's oil supply passes through the waterway.

"Tensions between Washington ‌and Tehran remain high, but the prevailing view ‌is that full-scale armed conflict is unlikely, prompting a wait-and-see approach," said Hiroyuki Kikukawa, chief strategist of ‌Nissan Securities Investment, a unit of Nissan Securities.

"US President Donald Trump does not ‌want a sharp rise in crude prices, and even if military action occurs, it would likely be limited to short-term air strikes," Kikukawa added.

A degree of progress was made during Iran talks in Geneva this week but distance remained on some issues, the White House said on Wednesday, ‌adding that it expected Tehran to come back with more details in a couple of weeks.

Iran issued a notice to ⁠airmen (NOTAM) that ⁠it plans rocket launches in areas across its south on Thursday from 0330 GMT to 1330 GMT, according to the US Federal Aviation Administration website.

At the same time, the US has deployed warships near Iran, with US Vice President JD Vance saying Washington was weighing whether to continue diplomatic engagement with Tehran or pursue "another option".

Meanwhile, two days of peace talks in Geneva between Ukraine and Russia ended on Wednesday without a breakthrough, with Ukrainian President Volodymyr Zelenskiy accusing Moscow of stalling US-mediated efforts to end the four-year-old war.

US crude and gasoline and distillate inventories fell last week, market sources said, citing American Petroleum Institute figures on Wednesday, contrary to expectations in a Reuters poll that crude stocks would rise by 2.1 million barrels in the week to February 13.

Official US oil inventory reports from the Energy Information Administration are due on Thursday.