Saudi Economy Accelerates as Diversification and Legal Reforms Drive Growth

Quality of life represents a strategic national priority in Saudi Arabia (SPA). 
Quality of life represents a strategic national priority in Saudi Arabia (SPA). 
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Saudi Economy Accelerates as Diversification and Legal Reforms Drive Growth

Quality of life represents a strategic national priority in Saudi Arabia (SPA). 
Quality of life represents a strategic national priority in Saudi Arabia (SPA). 

Saudi Arabia’s economy has undergone nearly a decade of transformation under Crown Prince Mohammed bin Salman, as sweeping reforms and diversification efforts reshape the country’s economic landscape.

Since the launch of Saudi Vision 2030 in April 2016, the Kingdom has embarked on its most significant economic shift in decades. The transformation has extended far beyond fiscal adjustments or limited diversification programs, evolving instead into a broad structural reform aimed at reducing reliance on oil and building a more diverse and dynamic economy.

Economic indicators suggest the strategy is gaining traction. Saudi Arabia’s gross domestic product (GDP) rose from about SAR 2.6 trillion in 2016 to nearly SAR 4.7 trillion in recent years, roughly $1.3 trillion, according to the latest official figures. That represents an average cumulative annual growth rate of about 8 percent, placing the Kingdom among the fastest-growing major economies globally during this period.

The shift reflects Vision 2030’s broader strategy to expand non-oil industries and widen the country’s production base beyond hydrocarbons.

 

Faisal Al-Fadhel, a legal expert in economic legislation and a member of the board of trustees of the Riyadh Economic Forum, said the reforms launched under Crown Prince Mohammed bin Salman have introduced a more diversified and sustainable economic model.

“Saudi Arabia has moved toward reducing its dependence on oil while expanding promising sectors such as tourism, technology, logistics and advanced industries,” Al-Fadhel told Asharq Al-Awsat. “This approach enhances the resilience of the national economy and increases the attractiveness of the Saudi market for both domestic and foreign investors.”

Recent economic indicators support that assessment. Non-oil activities have recorded strong growth, the private sector’s contribution to GDP has expanded, and foreign direct investment inflows have increased. At the same time, Saudi Arabia has improved its standing in global competitiveness indicators, reinforcing its ambitions to become a regional hub for business and investment.

Al-Fadhel noted that the transformation has also been supported by a broad legislative reform agenda designed to modernize the regulatory environment. Key economic and commercial laws — including the Companies Law, Investment Law, and Bankruptcy Law — have been updated, alongside regulations related to corporate governance, investor protection and competition. The reforms aim to improve transparency, regulatory certainty and the efficiency of the investment environment.

Non-Oil Sectors Lead Growth

One of the most visible outcomes of the economic shift is the rising contribution of non-oil sectors, which now account for 56 percent of GDP. Data show that non-oil activities were the primary driver of real economic growth in 2025.

Saudi Arabia ended 2025 with its strongest growth in two years, with GDP expanding 4.5 percent, according to estimates by the General Authority for Statistics (GASTAT). The economy grew 5 percent in the fourth quarter, with all major sectors contributing to the expansion compared with 2024.

Labor Market Changes

The Saudi labor market has also seen notable shifts. Unemployment among Saudi nationals has declined, while female participation in the workforce has reached record levels following a series of labor and regulatory reforms.

More than 2.48 million Saudis have joined the private sector in recent years, reflecting the impact of job localization policies. Economic transformation programs have also generated roughly 800,000 new jobs, with strong growth in engineering professions.

Employment opportunities have expanded particularly in tourism, supported by major entertainment and tourism projects, as well as in the pharmaceutical and medical manufacturing industries, where job numbers have doubled.

Investment at the Center

Investment has become a central pillar of the Kingdom’s economic strategy. Crown Prince Mohammed bin Salman has positioned both domestic and foreign investment as key drivers of growth and diversification.

The government established the Ministry of Investment and launched the National Investment Strategy as a comprehensive framework to boost capital formation. Total investment — measured by fixed capital formation — has risen from about SAR 672 billion in 2017 to roughly SAR 1.44 trillion by the end of 2024, more than doubling in less than a decade.

Al-Fadhel emphasized that the private sector is a critical partner in achieving Vision 2030 goals through expanded investment, technological adoption, innovation, and entrepreneurship.

Public Investment Fund Expands Role

The Public Investment Fund (PIF) has emerged as a central instrument of the transformation. With assets estimated at SAR 3.47 trillion, it has become one of the world’s largest sovereign wealth funds.

PIF is leading major investments in tourism, renewable energy, industry, technology and entertainment while launching large-scale development projects designed to create new industries and strengthen Saudi Arabia’s position as a global economic hub.

 

 



Kremlin: Saudi Arabia Named Guest of Honor at St. Petersburg Economic Forum

Russian President Vladimir Putin delivers a speech during a plenary session of last year’s St. Petersburg International Economic Forum. (Reuters)
Russian President Vladimir Putin delivers a speech during a plenary session of last year’s St. Petersburg International Economic Forum. (Reuters)
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Kremlin: Saudi Arabia Named Guest of Honor at St. Petersburg Economic Forum

Russian President Vladimir Putin delivers a speech during a plenary session of last year’s St. Petersburg International Economic Forum. (Reuters)
Russian President Vladimir Putin delivers a speech during a plenary session of last year’s St. Petersburg International Economic Forum. (Reuters)

The Kremlin said Saudi Arabia will be featured as the “guest of honor” at the 29th St. Petersburg International Economic Forum, SPIEF, in 2026, which opens this week.

The Russian presidency said Saudi Energy Minister Prince Abdulaziz bin Salman will lead a high-level delegation of major national institutions and companies, headed by Saudi Aramco.

The announcement coincided with talks in Moscow between Russian Foreign Minister Sergei Lavrov and Saudi Foreign Minister Prince Faisal bin Farhan.

Lavrov said Saudi Arabia’s selection as the guest country for 2026 carried major historical symbolism, coinciding with the 100th anniversary of diplomatic relations between the two countries.

He praised Saudi Arabia’s strong participation in the 2025 forum, also led by Prince Abdulaziz, which included productive talks with Russian Deputy Prime Minister Alexander Novak.

Through its national pavilion, the Kingdom will showcase its investment, export, and tourism potential, hold business talks, and present a rich cultural program.

Anton Kobyakov, an adviser to the Russian president, said the participation would inject new momentum into the strategic partnership between Moscow and Riyadh across energy, industry, transport, finance, and high technology.

Saudi Arabia now joins other Global South countries that have previously received the honorary status, including Qatar, Egypt, the United Arab Emirates, Oman, and Bahrain.

Founded in 1997, the St. Petersburg forum is Russia’s leading annual economic conference.

It brings together heads of state, finance ministers, and chief executives from Russian and international companies to discuss challenges facing emerging markets and the global economy.

The forum draws more than 10,000 participants each year from about 100 countries. In 2025, it posted a record turnout of 24,200 participants from 144 countries and saw agreements worth 6.48 trillion rubles ($89 billion) signed.

Russian President Vladimir Putin has regularly attended the forum’s plenary sessions since 2005, except from 2008 to 2011, when Dmitry Medvedev attended.

This year’s list of official partners and sponsors includes more than 100 major companies and institutions, led by key partners Rosatom and VEB.RF, along with banking and energy players, including Sberbank, Gazprom, and Novatek.


Is the $1.8 Trillion Private Credit Market Headed for a ‘Credit Winter’?

Raindrops hang on a sign for Wall Street outside the New York Stock Exchange in Manhattan in New York City, New York, US, October 26, 2020. (Reuters)
Raindrops hang on a sign for Wall Street outside the New York Stock Exchange in Manhattan in New York City, New York, US, October 26, 2020. (Reuters)
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Is the $1.8 Trillion Private Credit Market Headed for a ‘Credit Winter’?

Raindrops hang on a sign for Wall Street outside the New York Stock Exchange in Manhattan in New York City, New York, US, October 26, 2020. (Reuters)
Raindrops hang on a sign for Wall Street outside the New York Stock Exchange in Manhattan in New York City, New York, US, October 26, 2020. (Reuters)

Could private credit become the next global financial crisis? The question is gaining urgency across financial and regulatory circles after years of explosive growth in lending outside the traditional banking system created a market worth more than $1.8 trillion, much of it operating beyond close regulatory scrutiny.

The concerns sharpened after JPMorgan Chase CEO Jamie Dimon warned that losses in the sector could exceed expectations once the credit cycle turns, citing deteriorating lending standards and rising leverage.

Regulators are beginning to respond. The Financial Stability Board, which includes G20 central bank governors and finance ministers, has urged national regulators to tighten oversight of private credit markets. At the same time, the European Central Bank identified private credit as one of the leading threats to financial stability alongside elevated asset valuations.

In its Financial Stability Review released in late May, the ECB highlighted two major vulnerabilities within the sector. The first was what it described as a “snowball effect,” with some funds struggling to liquidate assets while facing rising redemption requests from investors, increasing the risk of distressed sales.

The second was the rise of “double leverage,” as private credit funds increasingly borrow from traditional banks to finance their own lending activity, creating deeper links between banks and nonbank lenders.

Mohammed Farraj, senior executive for asset management at Arbah Capital, explained that the sector’s rapid expansion was rooted in structural shifts that followed the 2008 global financial crisis. As banks pulled back from lending to small and medium-sized companies under stricter Basel III capital and liquidity regulation, private credit funds moved in to fill the financing gap.

Jamie Dimon, Chairman and Chief Executive officer (CEO) of JPMorgan Chase & Co. (JPM) speaks to the Economic Club of New York in Manhattan in New York City, US, April 23, 2024. (Reuters)

“Their flexibility and ability to move quickly outside conventional banking restrictions allowed them to capture significant market share,” Farraj told Asharq Al-Awsat.

Private credit refers to direct lending to companies through nonbank financial institutions without using banks or public debt markets. Unlike traditional banks, which rely on short-term deposits and operate under strict liquidity requirements, private credit funds are financed by long-term institutional capital from pension funds, insurers, and sovereign wealth funds.

The sector encompasses a wide range of financing tools, including direct lending, mezzanine financing, distressed debt investing, startup financing, and asset-backed lending tied to real estate, equipment, or intellectual property.

Years of ultra-low interest rates after 2008 accelerated institutional demand for private credit as investors searched for higher yields. More recently, higher global interest rates have made the sector even more attractive because many private credit loans carry floating rates that rise automatically with central bank tightening.

Farraj argued that the current environment offers annual returns ranging from 10 percent to 15 percent, well above those available in traditional fixed-income markets.

The company logo and trading information for BlackRock is displayed on a screen on the floor of the New York Stock Exchange (NYSE) in New York, US, March 30, 2017. (Reuters)

However, he cautioned that higher borrowing costs are also placing growing pressure on heavily indebted companies, increasing the risk of defaults, particularly among businesses with fragile balance sheets.

Transparency remains one of the sector’s biggest weaknesses. Private credit assets are not priced daily in public markets but are instead valued periodically using internal models, potentially delaying the recognition of losses and creating a misleading impression of stability.

Concerns intensified earlier this year after a BlackRock private credit fund cut its net asset value by nearly 19 percent because of deteriorating technology-sector loans, prompting closer scrutiny from US regulators.

Despite mounting concerns, Farraj maintained that private credit differs fundamentally from the 2008 mortgage crisis because losses are concentrated among sophisticated institutional investors rather than bank depositors.

Still, he warned that hidden systemic risks could emerge through the growing ties between banks and private credit funds.

He expected the sector to surpass $3 trillion in the coming years, driven by institutional demand and the expanding use of artificial intelligence in credit analysis and risk assessment.


Saudi Healthcare Firms Post $305 Million in Q1 Profit

Members of a family gather to visit a patient at a Dr. Sulaiman Al Habib hospital in Saudi Arabia (website) 
Members of a family gather to visit a patient at a Dr. Sulaiman Al Habib hospital in Saudi Arabia (website) 
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Saudi Healthcare Firms Post $305 Million in Q1 Profit

Members of a family gather to visit a patient at a Dr. Sulaiman Al Habib hospital in Saudi Arabia (website) 
Members of a family gather to visit a patient at a Dr. Sulaiman Al Habib hospital in Saudi Arabia (website) 

Saudi Arabia’s listed healthcare companies reported combined net profits of SAR1.148 billion ($305.9 million) in the first quarter of 2026, as aggressive expansion plans and higher financing costs pressured earnings despite strong demand for medical services.

The Kingdom’s 13 publicly traded healthcare firms saw profits decline 38.3 percent from SAR1.862 billion ($496.2 million) a year earlier, according to financial disclosures on the Saudi Exchange (Tadawul). Analysts described the drop as a temporary correction tied to capital expenditures rather than a sign of weakening sector fundamentals.

The sector continued to benefit from rising demand for healthcare services, growing patient volumes, higher hospital occupancy rates, geographic expansion, increased operating capacity, and the steady growth of health insurance coverage. Government-backed digital transformation and healthcare reforms under Saudi Vision 2030 also continued to support the industry.

The listed firms include Dr. Sulaiman Al Habib Medical Group, Mouwasat Medical Services, Dallah Health, Saudi Chemical Company Holding , Ayyan Investment company, Care Medical, Fakeeh Care Group, SMC Healthcare, Al Hammadi Holding, Almoosa Health, Middle East Healthcare Company (Saudi German Health), Scientific and Medical Equipment House, and Canadian Medical Center.

Dr. Sulaiman Al Habib Medical Services Group remained the sector’s dominant player, accounting for about 43 percent of total industry profits. The company posted SAR503 million in net income during the quarter, although earnings fell 9.6 percent because of higher fixed costs linked to strategic expansion projects, as well as increased depreciation and financing expenses. Revenue nevertheless rose 8.8 percent to SAR3.44 billion.

Mouwasat Medical Services ranked second, reporting profits of SAR201 million, up 2 percent year-on-year. The company attributed the performance to the resilience of its operating model, lower zakat provisions, and a 9.1 percent increase in revenue to SAR 833.8 million.

Saudi Chemical Holding Company came third, posting net profits of SAR87.2 million, up 5.9 percent from the same period last year. The gains were driven by higher product sales volumes, lower provisions for trade receivables, reduced financing expenses, and profits from the revaluation of derivative instruments used to hedge interest-rate risks.

Financial analyst Nasser Alrashid said the healthcare sector remains among the Saudi market’s most defensive and stable industries, supported by long-term drivers including population growth, expanding health insurance coverage, and Vision 2030 healthcare reforms.

For his part, market analyst Tariq Al Atiq said sector profitability is likely to improve in the second half of 2026 as companies gradually absorb expansion-related costs and new projects reach stronger occupancy levels. He added that privatization, public-private partnerships, and wider adoption of digital technology and artificial intelligence are expected to further support growth.