Saudi Arabia GDP: Q1 2025 Growth Signals Vision 2030’s Diversification Momentum

In Q1 2025, Saudi Arabia's economy expanded by 2.7%, driven by a 4.2% surge in non-oil activities and a 3.2% rise in government services, despite a 1.4% decline in oil-related activities. This growth underscores the Kingdom's commitment to economic diversification under Vision 2030. GASTAT's recent data revisions, aligning with international standards, further highlight the emphasis on non-oil sectors. For business leaders eyeing expansion into Saudi Arabia, these developments signal a maturing market ripe with opportunities beyond oil.

Saudi Arabia's Q1 2025 GDP Growth: A Closer Look

Saudi Arabia’s economy posted a 2.7% year-on-year expansion in Q1 2025, according to the latest preliminary estimates by the General Authority for Statistics (GASTAT). While the headline figure reflects modest growth, the underlying data tells a more compelling story — one that supports the Kingdom’s strategic pivot away from oil dependency towards a more resilient, diversified economy.

Breaking Down the Numbers

• Non-oil activities grew by a solid 4.2%, marking one of the strongest quarterly performances for the sector since Vision 2030 was launched.
• Government services, including public administration and defence, expanded by 3.2%, indicating continued investment in social infrastructure and human capital.
• Oil activities, in contrast, declined by 1.4%, dragged down by voluntary production cuts in line with OPEC+ commitments.

This mixed composition highlights a turning point: non-oil sectors are no longer supplementary — they are becoming the engine of growth.

What’s Driving Non-Oil Growth?

GASTAT’s recalibration of its GDP methodology in 2024 — increasing the weight of non-oil sectors and adopting international best practices — has produced more nuanced insights. The following sectors were pivotal to Q1’s performance:

• Construction and infrastructure — buoyed by megaprojects like Neom and the Riyadh Metro, this sector has attracted significant public and private investment.
• Transport and logistics — part of Saudi Arabia’s strategy to become a regional trade hub, saw robust gains tied to expanded port operations and new trade routes.
• Financial services — liberalisation efforts have opened the sector to foreign banks and fintech players, leading to increased competition and innovation.
• Tourism and entertainment — major events such as Riyadh Season and Diriyah ePrix brought both footfall and foreign capital, aligning with Vision 2030 goals to grow the tourism sector to 10% of GDP by 2030.

Each of these sectors benefits from strong alignment with government policy, infrastructure investment, and international interest — a trifecta that is accelerating transformation.

Saudi Arabia’s Q1 performance is notable against the backdrop of slowing global growth, volatile energy markets, and geopolitical instability. While many oil-exporting nations struggled to maintain momentum due to falling crude prices, the Kingdom demonstrated relative economic resilience — a direct result of its diversification agenda.

Vision 2030: Driving Economic Diversification

Launched in 2016, Vision 2030 aims to reduce Saudi Arabia's dependence on oil by developing public service sectors such as health, education, infrastructure, recreation, and tourism. The recent GDP figures indicate progress towards these goals, with non-oil sectors showing consistent growth.

Key initiatives under Vision 2030 include:

• Neom: A $500 billion mega-city project focusing on innovation and sustainability.
• Alat: A tech manufacturing company aiming to contribute $9.3 billion to GDP by 2030 .
• Soudah Peaks: A mountain tourism destination projected to add $7.8 billion to GDP by 2033 .

These projects exemplify the Kingdom's commitment to creating a diversified and resilient economy.

Implications for International Business Leaders

The sustained growth in non-oil sectors presents significant opportunities for international businesses:

• Market Entry: Sectors such as tourism, entertainment, and technology are expanding, offering entry points for foreign investment.
• Regulatory Environment: Reforms are simplifying business procedures, making it more attractive for foreign entities to establish operations.
• Strategic Location: Saudi Arabia's position as a regional hub provides access to broader Middle Eastern and African markets.

However, challenges remain, including navigating regulatory frameworks and understanding local market dynamics. Partnering with experienced local consultants can mitigate these risks.

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Saudi Arabia's Q1 2025 GDP growth reflects the tangible progress of Vision 2030's economic diversification efforts. For business leaders considering expansion, the Kingdom offers a landscape of emerging opportunities beyond the oil sector.

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From our experience guiding over 100 companies into the Saudi market, we observe that non-oil sector growth is not just statistical, it’s operational. Clients entering sectors such as professional services, IT, and hospitality are experiencing real demand and streamlined onboarding, thanks to recent regulatory reforms and digitisation of business processes.

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As a result, Q1’s growth figures are not an anomaly, they are early indicators of a structural shift that presents long-term opportunity for foreign entrants.

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‍Ready to explore opportunities in Saudi Arabia?

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Connect with Peninsula for a free consultation and discover how we can support your expansion journey.

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About Alistair:

‍Alistair Paine brings 15 years of dedicated experience in Saudi market entry, guiding Fortune 500 companies and innovative scale-ups through successful establishment in the Kingdom. His expertise in Saudi company formation, licensing and market entry strategy, positions him as a leading authority and consultant in international business expansion to Saudi Arabia.

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Schedule a free consultation with Alistair and the Peninsula team to understand which market entry strategy is best suited to your business setup in Saudi Arabia.

Email: Alistair@peninsulacs.com

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