Capital Economics forecasts subdued economic growth for Saudi Arabia through 2025, attributing it to conservative oil policies and fiscal consolidation efforts. The country’s GDP growth slowed from 1.4% in the second quarter to 0.9% in the third quarter, though year-on-year growth improved to 2.8%. The sectoral performance showed growth in the oil and private non-oil sectors, but government activities contracted by 0.3%.
The oil sector remains a key focus, with OPEC+ maintaining production levels until April 2025, keeping output steady at 8.9 million barrels per day. However, the non-oil sector exhibited resilience, as private sector credit growth and mortgage lending rose. Indicators like local cement deliveries and PMI data suggest some momentum, though consumer confidence hit a six-month low, and domestic demand showed signs of slowing towards the year-end.
Looking ahead, the report predicts Saudi Arabia’s GDP will grow by 2.8% in 2025, underpinned by a modest 5% rise in oil production. Weaker oil revenues, driven by expected price declines to $70 per barrel, could prompt tighter fiscal policies. While growth is anticipated, it will likely fall short of broader market expectations, reflecting ongoing structural and external pressures on the economy.
