Saudi Arabia’s non-oil sector ends 2024 with continued growth

Photo: The non-oil sector in Saudi Arabia is at a near 17-month high (by Adobe).

​ Ahmad Abdel-Rahman explains that the non-oil sector in Saudi Arabia remained near a 17-month high in December, and business expectations improved to a nine-month high as companies were optimistic about continued growth in 2025.

Data from the General Authority for Statistics (GAS) showed on January 5 that strong demand drove growth in Saudi Arabia's non-oil sector in December, albeit at a slightly slower pace than the previous month. 

The data also showed that the seasonally adjusted Riyadh Bank Purchasing Managers' Index (PMI) fell to 58.4 in December from a 17-month high of 59 in November. Despite the decline, the headline PMI remained above 50, which indicates growth. 

New orders continued to rise, marking the fifth consecutive month of acceleration, supported by strong domestic demand and stronger exports. The sub-index rose to 65.5 in December from 63.4 the previous month, the fastest growth rate in 2024. "Saudi Arabia's non-oil private sector concluded 2024 on a high note, reflecting the successful steps taken under Vision 2030," said Naif Al-Ghaith, chief economist at Riyadh Bank, referring to the Saudi government's ambitious programme to diversify its economy. 

Cost pressures remained a concern, with input prices rising sharply due to strong demand for materials. However, wage inflation eased, helping to ease overall cost burdens. 

Business outlook hits nine-month high 

Business expectations improved to a nine-month high in December as companies were optimistic about continued growth in 2025. 

Al-Ghaith said non-oil GDP is expected to grow by more than 4 percent in 2024 and 2025, driven by a significant improvement in business conditions. The Saudi government plans to increase strategic spending on mega projects to achieve the goals of its Vision 2030.

Net foreign direct investment (FDI) inflows to Saudi Arabia increased by 16 billion riyals (USD 4.26 billion) during the third quarter of this year, or 37 percent, compared to the second quarter of this year, which witnessed net foreign direct investment worth 11.7 billion riyals (USD 3.12 billion), according to data from the Saudi General Authority for Statistics issued recently.

Saudi non-oil exports 

Saudi non-oil exports, including re-exports, increased by 12.7 percent in October to about 25.4 billion riyals (USD 6.78 billion), compared to 22.53 billion riyals in October 2023. Non-oil national exports (excluding re-exports) also increased by 5.1 percent to about 19.4 billion riyals (USD 5.18 billion). The value of re-exported goods increased by 47.1 percent during the same period. 

In July 2024, the International Monetary Fund (IMF) raised its expectations for Saudi economic growth in 2025 by 0.2 percentage points to 4.7 percent, compared to its previous estimates lof about 4.5 percent.

 Last September, the Saudi Ministry of Finance announced the preliminary statement of the state's general budget for the fiscal year 2025. The statement expected total expenditures to reach approximately 1.285 trillion riyals (USD 342.7 billion) and total revenue to reach about 1.184 trillion riyals (USD 315.8 billion). 

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