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On 14 March 2025, S&P Global Ratings upgraded Saudi Arabia’s sovereign credit rating from ‘A’ to ‘A+’, marking the first increase in two years. The report states: “The upgrade reflects our view that the ongoing social and economic transformation in Saudi Arabia is underpinned by improving governance effectiveness and institutional settings, including deepening domestic capital markets. We believe that institutional checks and balances have become more visible as Vision 2030 progresses, as reflected by the recalibration of project priorities and timelines.”. Reflecting the country’s substantial progress in implementing socio-economic reforms under Vision 2030, the adjustments made also demonstrate a more prudent approach to capital expenditure management. Countries with a comparable S&P rating include China, Japan, and Slovakia. As for other rating agencies, Fitch reaffirmed in March its A+ rating, which was initially assigned at the end of 2023, and Moody’s raised Saudi Arabia’s sovereign rating from A1 to Aa3 in November 2024.
According to the report, one of the main reasons behind the rating upgrade is the strengthening of Saudi Arabia’s economic and financial institutions. S&P highlights that the country’s institutional framework has moved closer to the standards of other nations rated in the ‘A’ category, thanks to improved governance and more effective public policy management.
The large-scale public infrastructure projects initiated by the Saudi government, alongside sustained foreign direct investment and the resilience of the banking and financial sector, have established the Kingdom as the foremost economy in the region and a significant player on the global stage.
Saudi Arabia’s economic growth figures indicate positive prospects, suggesting that the diversification efforts under Vision 2030 are beginning to yield results. According to the General Authority for Statistics (GASTAT), the country’s economy expanded by 1.3% in 2024, driven by a 4.3% increase in the non-oil sector. For reference, in 2023, Saudi Arabia’s economy experienced a slight contraction of 0.8%, due to an unfavourable base effect, a reduction in oil production following OPEC+’s restrictive policy, weaker-than-expected Chinese demand for petrochemical products, and a decline in energy prices.
In the fourth quarter of 2024, Saudi Arabia’s economic growth reached 4.4% year-on-year, marking its highest level in two years. The most dynamic non-oil sectors included wholesale and retail trade, as well as hospitality and food services, which recorded a 6.4% increase. Financial and insurance services expanded by 5.7%, while the electricity, gas, and water sector grew by 4.9%. Overall, non-oil activities accounted for 52% of the Kingdom’s total economic output.
In the medium term, growth in the non-oil sectors is expected to remain strong, driven primarily by robust household consumption and investments made under the framework of Vision 2030. This economic diversification is gaining momentum, particularly in the manufacturing, logistics, and non-oil extractive industries, alongside massive infrastructure investments and the ongoing expansion of the tourism sector. The solid performance outside of hydrocarbons is supported by the authorities’ substantial investment policy, aimed at diversifying the economy. This diversification is supported by the financial strength and significant borrowing capacity of Saudi sovereign wealth funds, notably the Public Investment Fund (PIF). The PIF remains focused on directing USD 40 billion annually into the local economy, with an emphasis on giga and mega projects.
The International Monetary Fund’s growth forecasts are positive, projecting 3.3% for 2025, 4.1% for 2026, and between 3.5% and 4.5% from 2027 to 2029. However, these expectations have been revised downwards (from 4.6% to 3.3% for 2025) due to the extension of oil production cuts by OPEC+. In 2024, Saudi Arabia’s oil production averaged 9 million barrels per day (mb/d), a decline from 9.6 mb/d in 2023 and 10.5 mb/d in 2022. These production reductions are anticipated to result in a shortfall of 0.4 mb/d in 2025. While a significant contraction in oil production seems unlikely at this stage, the oil sector’s constraints will limit overall growth. Consequently, the bulk of economic expansion is expected to derive from the non-oil sector, which is projected to continue growing at a rate of at least 4%.
The improvement in Saudi Arabia’s credit rating is closely tied to the development of its capital markets, which have become a central tool for the Kingdom’s financing. The Saudi Stock Exchange, Tadawul, plays a crucial role in financing the economy and dominates regional markets, representing 62% of the market capitalisation of Arab stock platforms in 2024. Tadawul’s total market capitalisation reached USD 2.72 trillion in 2024, approximately 245% of GDP. Saudi Arabia was the leading GCC market for IPOs in 2024, with 42 IPOs raising USD 4.1 billion, and the Kingdom also saw Aramco’s secondary offering in June 2024, which raised USD 12.4 billion (0.7% of its capital), largely from international investors, reflecting confidence in Saudi Arabia’s economic reforms. This growing investor confidence is further supported by S&P’s A+ rating, which is expected to bolster continued trust in the Kingdom’s economic trajectory.
The labour market has delivered significant results since 2016. According to GASTAT, the overall unemployment rate stood at 3.7% in Q3 2024, up from 3.3% in Q2, which marked its lowest point in history. This is a significant decrease from the 9% peak in Q2 2020 and the average of 5.8% observed from 2015 to 2019. The unemployment rate among nationals also reached its lowest level at 7.1% in Q2 2024, down from 11.5% at the end of 2015, according to the IMF. Reducing unemployment and creating new jobs are key goals of the Kingdom’s Vision 2030, and the decline in unemployment over the last decade has been largely driven by the increased participation of women in the workforce: the participation rate reached 37%, exceeding the 30% target for 2030.
The Consumer Price Index (CPI) averaged 1.7% in 2024, compared to 2.3% in 2023, mainly due to rising Housing, Water, Electricity, Gas (+8.8%, influenced by a 10.6% increase in housing rental prices) and tourism-related flows (+2% for Restaurants and Hotels). In January 2025, the annual inflation rate reached 2.0% compared to the previous year. However, the S&P report forecasts that inflation will remain under control, averaging around 1.9% over the next four years. Saudi Arabia’s inflation rate is considered one of the lowest among G20 countries.
Despite substantial progress, Saudi Arabia still faces challenges. Public finances remain dependent on oil, but it is important to note that the rating agency forecasts an average Brent crude price of 70 USD per barrel between 2025 and 2028, compared to 81 USD in 2023. S&P forecasts a deficit of -4.8% of GDP in 2025, while the Ministry of Finance projects a smaller deficit of -2.3%, after -2.8% in 2024.
With ambitious Vision 2030 Projects that are projected to exceed USD 1 trillion, Saudi Arabia has substantial financing requirements. S&P forecasts a gradual rise in borrowing and a more phased approach to investment implementation. While the government’s net asset position is expected to decrease, it will remain strong, reaching approximately 32% of GDP by 2028, from around 55% estimated in 2023. Despite the growing need for external funding, Saudi Arabia is likely to retain its status as a net creditor on the global stage over the next four years. In November 2024, the Saudi Minister of Finance H.E. Mohammed Al-Jadaan has stated that all strategies and projects planned up to 2030 have sustainable financing mechanisms in place that do not strain public finances. In 2024, the Kingdom’s gross external debt increased to reach 39% of GDP, driven by higher borrowing from banks, the government, PIF, and Aramco. According to the 2025 Annual Borrowing Plan published by the Ministry of Finance, Saudi Arabia aims to diversify its financing channels, including exploring new markets and currencies based on market conditions.
In conclusion, Saudi Arabia stands at a pivotal moment in the implementation of its Vision 2030, a pillar of its economic diversification and the strengthening of its financial and economic institutions. Substantial progress has been made, and the country’s economic diversification efforts and institutional reforms continue to support its economic resilience.
This positive economic trajectory has not gone unnoticed by international partners, including the European Union. As a key economic partner of Saudi Arabia, the EU has welcomed the Kingdom’s commitment to institutional reform, fiscal sustainability, and economic diversification under Vision 2030. The EU’s ongoing engagement with Saudi Arabia through high-level dialogues, trade cooperation, and support for private sector development with the creation of the European Chamber of Commerce in the Kingdom of Saudi Arabia reflects a shared interest in long-term stability, economic resilience, and mutually beneficial investment opportunities across sectors such as renewable energy, advanced manufacturing, and digital innovation.
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