Saudi Arabia: better growth prospects


In Saudi Arabia, the decline in oil production is weighing on economic growth, but non-oil activity is buoyant thanks to massive investment programs. In the short term, tight labour market and rising geopolitical risk could constrain the rebound in activity. In the medium term, the kingdom's financial strength should allow the economy to continue to diversify.


In Saudi Arabia, economic activity is mixed. Oil production is declining given the leading role of Saudi Arabia in the restrictive OPEC policy. And on the other side, the non-oil sector is sustained by service and by investment in infrastructures. In 2023, we had a small economic recession by 0.8% given the decline in oil production and given weak Chinese demand in petrochemicals.

In 2024, economic activity should be only slightly positive. We expect 1.2% on average. In fact, oil production should only slightly progress and not before Q4 2024. With regard to non-oil activity, the tight labor market conditions will be a constraint on an economic rebound. Indeed, the unemployment rate has stabilized and the participation rate has stopped to progress for about two years despite a sharp increase in female participation rate to the labor market for several years.

In the medium term, economic activity should be supported by household consumption and by investment under the Vision 2030 Program. In this context, economic diversification should progress notably in service and industrial sectors, and this diversification will be supported by sizeable financial assets and high capacity of leverage of the sovereign funds of Saudi Arabia.