Saudi Arabia’s Non-Oil Economy Surges, Fueling 3.4% GDP Growth in Q1 2025

Malaz Madani

Last updated 10-06-2025

3 min

Saudi Arabia's first-quarter GDP grew 3,4% in 2025, reflecting successful diversification.

Non-oil sectors, notably retail and hospitality, lead the growth with an 8,4% increase.

Government spending surged 5,5% quarterly, showing strong economic support.

Oil sector declines emphasise the importance of Saudi's Vision 2030 diversification efforts.

Non-oil exports rose 13,4%, while oil exports fell 8,4%, shifting export dynamics.

Saudi Arabia's economy kicked off 2025 on a surprisingly bright note, posting a revised first-quarter GDP growth rate of 3.4% compared to the same period last year. It seems the Kingdom’s push to diversify beyond oil is starting to bear fruit, as the non-oil sectors led the charge this time round, according to figures released by the General Authority for Statistics (GASTAT).

Interestingly, this updated figure represents a decent jump from the previously published flash estimate, which pegged growth at only 2.7%. In clearer terms, it shows that businesses and government activities have been steadily ramping up, giving a lift to the broader economy—even as the traditional cash-cow, oil—the lifeblood of the Saudi coffers—saw a slight drop.

Breaking it down, the non-oil sector grew by an impressive 4.9% year-on-year, managing a modest uptick of 1% from the previous quarter. Government spending also perked up considerably, with a 3.2% annual increase from last year’s figures, and a notable quarterly surge of 5.5%. Given this solid momentum, it's fair to say that Riyadh’s plan to diversify away from hydrocarbons seems to be more than just hot air.

However, the oil sector itself experienced a somewhat gloomy quarter, sliding by 0.5% year-on-year and down 1.2% from the final months of 2024. It's another subtle reminder that it makes sense to avoid putting all your eggs in one basket—something the Kingdom clearly recognises, reflected in its long-term Vision 2030 ambitions.

Examining specific industries tells an intriguing story: the highest-flying sector in the first quarter was retail, restaurants and hotels—perhaps reflecting post-pandemic pent-up demand—with an eye-catching 8.4% annual growth. Close behind them were transport, storage and communication sectors, which expanded by a steady 6%, suggesting both tourism and logistical hubs are hitting their stride across the Kingdom.

Financial, insurance and business services also reported healthy growth figures, rising 5.5% year-on-year; however, they showed a slight drop quarter-on-quarter by 0.1%, indicating there's still room for impruvement as the year unfolds.

The country's export landscape also reflects Saudi Arabia’s ongoing economic shift. Non-oil exports saw significant gains, growing at an impressive 13.4% rate compared to the same quarter last year. On the flip side, oil exports dipped 8.4%, dragging overall merchandise exports down by 3.2%. What's worth noting here is the declining share of oil in total exports—from 75.9% last year drying up slightly to 71.8% this year.

The changes underway highlight Saudi Arabia's determined efforts to shake off reliance on oil revenues. Readers of Arageek might remember we recently discussed the promising startup scene brewing in the Kingdom, and indeed, investments into sectors such as tech, tourism and infrastructure are clearly gathering pace. The numbers coming out of Riyadh today suggest this strategy is indeed paying dividends.

So, while oil still underpins much of Saudi Arabia’s economy, the country is steadily diversifying and reshaping, setting itself up for what looks likely to be continued healthy growth over the next few years.

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