The Kingdom of Saudi Arabia (SA) reported a Gross Domestic Product (GDP) year-over-year (YoY) growth rate of 3.90% for the latest release dated September 8, 2025, according to the Sigmanomics database. This figure aligns precisely with market expectations and marks a notable improvement from the 3.40% recorded in June 2025. The data covers the Saudi economy’s nominal potential GDP growth, reflecting both oil and non-oil sectors.

Geographic & Temporal Scope

This report focuses exclusively on Saudi Arabia’s national economy, with the latest data reflecting activity through mid-2025. The YoY basis allows for seasonal adjustments and provides a clearer view of underlying growth trends compared to monthly or quarterly snapshots.

Core Macroeconomic Indicators

• GDP YoY growth: 3.90% (Sep 2025), up from 3.40% (Jun 2025)
• Previous highs: 4.50% (Mar 2025), low of 2.70% (May 2025)
• Inflation remains moderate, hovering near 2.50% annually
• Unemployment steady at approximately 7.50%

Monetary Policy & Financial Conditions

The Saudi Central Bank continues to maintain accommodative monetary policy, with policy rates stable at 3.00%. Liquidity conditions remain favorable, supporting credit growth in both public and private sectors. The Saudi Riyal’s peg to the US dollar provides currency stability, mitigating exchange rate volatility risks.

Saudi Arabia’s economic growth is primarily driven by oil revenues, which have rebounded due to higher global crude prices averaging $85 per barrel in Q3 2025. Non-oil sectors, including manufacturing, construction, and services, also contributed positively, reflecting ongoing diversification under Vision 2030 initiatives.

Fiscal Policy & Government Budget

The government’s fiscal stance remains prudent, with a budget surplus of 1.20% of GDP reported in Q2 2025. Public spending focuses on infrastructure and social programs, while subsidies have been gradually reduced to improve efficiency. The fiscal balance supports macroeconomic stability and investor confidence.

External Shocks & Geopolitical Risks

Geopolitical tensions in the Middle East, particularly involving regional conflicts and oil supply disruptions, pose downside risks. However, Saudi Arabia’s strategic reserves and diplomatic efforts help mitigate these threats. Global economic slowdowns, especially in China and Europe, could dampen export demand.

Financial Markets & Sentiment

Equity markets in Saudi Arabia have shown resilience, with the Tadawul index up 5% year-to-date. Investor sentiment is buoyed by stable oil prices and government reforms. Credit spreads remain tight, and foreign direct investment inflows have increased by 8% compared to last year.

Structural & Long-Run Trends

Structural reforms aimed at economic diversification, digital transformation, and private sector development continue to underpin long-term growth. The non-oil sector’s share of GDP has risen to 60%, up from 55% three years ago, signaling gradual but steady progress.

Drivers this month

• Oil sector growth contributed 1.20 percentage points (pp)
• Non-oil sector added 2.00 pp, led by construction and services
• Government spending added 0.30 pp
• Net exports subtracted -0.10 pp due to import growth

Policy pulse

The 3.90% GDP growth sits comfortably above the Saudi Central Bank’s inflation target range of 2-3%, indicating moderate overheating risks but no urgent need for tightening. Monetary policy remains accommodative to support diversification and employment goals.

Market lens

Immediate reaction: The Saudi Riyal remained stable against the US dollar, while the Tadawul index rose 0.40% in the first hour post-release. Breakeven inflation rates held steady, and 2-year government bond yields edged up by 5 basis points, reflecting cautious optimism.

Looking ahead, Saudi Arabia’s GDP growth trajectory depends on several factors, including oil price stability, global demand, and domestic reform progress. We outline three scenarios:

Bullish Scenario (30% probability)

• Oil prices remain above $85/barrel
• Non-oil sector growth accelerates to 4.50% YoY
• Fiscal surplus expands, enabling increased infrastructure investment
• GDP growth reaches 4.50-5.00% in 2026

Base Scenario (50% probability)

• Oil prices stabilize near $80/barrel
• Non-oil growth steady at 3.50-4.00%
• Fiscal balance remains neutral to slightly positive
• GDP growth holds around 3.80-4.00%

Bearish Scenario (20% probability)

• Oil prices fall below $70/barrel due to global slowdown
• Non-oil sector growth slows to below 3%
• Fiscal deficits widen, limiting government spending
• GDP growth dips below 3.00%

Risks to the outlook include geopolitical tensions, global economic shocks, and potential delays in reform implementation. Upside potential lies in faster diversification and foreign investment inflows.

Saudi Arabia’s 3.90% GDP YoY growth in September 2025 signals a resilient economy balancing oil dependency with diversification efforts. Monetary and fiscal policies remain aligned to sustain growth without overheating. External risks persist but are currently contained by stable financial markets and investor confidence. Structural reforms continue to improve the economic landscape, supporting a positive long-term outlook.

Key Markets Likely to React to Gross Domestic Product YoY

The Saudi GDP YoY release typically influences several key markets. The Tadawul stock index (TASI) often reacts positively to stronger growth data. The Saudi Riyal/USD forex pair (SARUSD) remains stable but can show volatility on surprises. Oil futures (OIL) correlate closely with GDP due to Saudi Arabia’s oil export reliance. The MSCI Saudi Arabia ETF (MSAU) tracks broader market sentiment. Lastly, Bitcoin (BTCUSD) sometimes moves inversely to risk sentiment linked to economic data.

FAQs

What is the current GDP YoY growth rate for Saudi Arabia?

The latest GDP YoY growth rate is 3.90% as of September 2025.

How does Saudi Arabia’s GDP growth impact its currency?

Stronger GDP growth tends to support the Saudi Riyal’s stability against the US dollar, given the currency peg and economic fundamentals.

What are the main risks to Saudi Arabia’s economic growth?

Key risks include oil price volatility, geopolitical tensions, and global economic slowdowns.

Takeaway: Saudi Arabia’s GDP growth is on a steady recovery path, supported by oil revenues and diversification, but remains sensitive to external shocks and policy execution.