Saudi Arabia’s economy grew 2.7 percent in Q1, driven by non-oil sector activities and diversification
Saudi Arabia’s non-oil private sector activity expansion slowed in April as growth in new orders decelerated sharply, even as hiring rates reached their joint-fastest pace in more than a decade, a survey showed on Monday. The seasonally adjusted Riyad Bank Saudi Arabia Purchasing Managers’ Index (PMI) slid to 55.6 in April, the lowest reading since last August, from 58.1 in March, while remaining firmly in growth territory.
The slowdown in new order growth reflected global economic uncertainties and competitive pressures, with the new order subindex slipping for the third consecutive month to 58.6 in April from 63.2 in March. “While output growth remains robust, it is somewhat tempered by global economic uncertainties and competitive pressures affecting client spending,” Naif Al-Ghaith, Riyad Bank’s chief economist said. “Nonetheless, employment figures continue to climb, indicating a sustained growth trend since last May.”
The increase in employment was driven by rising sales and business activity, with firms expanding staffing capacity to meet demand. However, the degree of business optimism remained weaker than the long-run survey average, the survey showed. Saudi Arabia’s economy grew 2.7 percent in the first quarter, supported by activity in the non-oil sector as the kingdom pushes ahead with diversifying away from hydrocarbons.
Read more: Saudi Arabia reports 2.7 percent GDP growth in Q1 2025 driven by non-oil sector
Government initiatives support long-term growth
The state’s statistics authority has updated and expanded its data collection to increase the non-oil sector weighting to better align with international standards and data quality. Despite the easing growth, certain segments within the non-oil sector continue to show resilience. The construction and real estate sectors, for example, have remained relatively stable, supported by government initiatives aimed at boosting housing and infrastructure development.
Additionally, the technology and fintech sectors have seen increased activity, driven by a growing demand for digital solutions and services. The Saudi government has been actively promoting initiatives to enhance the business environment, attract foreign investment, and foster innovation across various industries. These efforts are crucial for sustaining long-term growth and reducing reliance on oil revenues.
