Saudi Arabia: Q1 2025 GDP results announced amidst comprehensive data update

Saudi Arabia has announced Q1 2025 GDP results, with a y/y growth rate of 2.7%. This was a slower pace of growth than the 4.4% seen the previous quarter, revised from the previous reading of 4.5%. It should be noted that the General Authority for Statistics (Gstat) has also announced ‘the implementation of a comprehensive update’ to Saudi Arabia’s GDP data, whereby the real growth figures were rebased from 2023 levels, compared with the 2018 level used previously. As such there have been significant upwards revisions to the full-year 2023 and 2024 growth figures for Saudi Arabia according to the flash estimate release.

Saudi Arabia real GDP growth, % y/y

Source: Gstat, Emirates NBD Research

Where previously 2023 saw a y/y contraction of 0.7% and 2024 saw growth of 1.3%, under the new regime 2023 headline growth was positive at 0.7%, while last year’s growth print was revised up by half a percentage point to 1.8%. We will have to wait for the full and final GDP print next month for the finer details of which sectors are performing more strongly than initially thought, but with the oil sector growth rates unchanged in the new data, it is the non-oil sector and government activity where the difference lies. In 2023, government activities now expanded at 2.0%, compared with the previous 1.0% figure, while 2024 saw 2.7% growth rather than 2.4%. The primary driver of the faster pace of growth over the past two years is the non-oil sector, which expanded by 7.1% in 2023 and 4.8% in 2024, compared with the initial readings of 4.4% and 4.3% respectively.

The Q1 2025 growth of 2.7% was driven by the non-oil and government sectors, with oil activities down y/y for the first time since Q2 last year. Oil production in Saudi Arabia averaged 8.95mn b/d in Q1, down 0.5% y/y and driving the oil sector to contract by 1.4% in the national accounts data. Government activities saw growth of 3.1%, up from 1.7% in Q4, while non-oil activities expanded by 4.2%, down from 4.8% the previous quarter.

We will be revising our Saudi Arabia database in light of the recent revisions but for now we are holding with our forecast of real GDP growth of 4.5% this year, predicated on a predicted 2.5% growth in the oil sector, 4.5% growth in non-oil GDP, and 2.0% growth in government activities. The risk is to the upside for government activities given the strong first quarter and recent growth trends, while we maintain a positive outlook on the non-oil sector despite the lower oil price environment. The PMI survey continues to show strong momentum, with new orders still expanding strongly as well as output, and we expect that the massive pipeline of projects in Saudi Arabia will keep growth at a robust pace through this year. While an extended period of lower oil prices might force a more general recalibration of project spending down the line (see GCC: Fiscal outlook) various commitments around holding major international events and boosting housing will ensure activity in the near term. Moreover, household spending continues to expand at a rapid pace which will be supported by lower interest rates and ongoing population growth.

With regards oil GDP, the risks if anything are to the upside given recent signals from Saudi Arabia around how it is willing and able to withstand lower oil prices for an extended period, spurring expectations for planned supply to be brought forward at the OPEC+ meeting next week. May output levels will already be higher than initially planned and the May 5 meeting could see barrels brought back onto the market even more swiftly (see Oil market braces for more barrels).