Moody’s: Saudi Arabia’s economic momentum remains strong

Saudi Arabia’s economic momentum supported by robust non-oil activity: Moody’s

Ratings agency Moody's Ratings stated that Saudi Arabia’s economic momentum remains strong, supported by robust non-oil activity, ratings agency Moody's said in a recent report.

The agency expects the Kingdom’s GDP is likely to grow 4% in 2025 and 4.5% in 2026, compared with 2% in 2024.

The report added that ongoing implementation of mega projects, strong private consumption demand, and unemployment at record low levels support non-oil activity.

Meanwhile, the end of OPEC+ oil production cuts, which began in April, is expected to boost the oil sector after two years of contraction.

Moody’s noted that Saudi Arabia’s economic strength, rated Aa3, reflects the size of its economy, high per capita income, and substantial hydrocarbon resources with low extraction costs, supporting its high competitiveness in the global oil market. However, the economy remains exposed to oil market volatility and long-term risks from the transition to low-carbon energy sources.

Saudi Arabia’s A3 rating for institutional strength and governance is supported by the country’s significant progress in implementing its wide-ranging reform agenda since 2016, and its strong track record of effective macroeconomic and fiscal policies.

Saudi Arabia’s financial strength, rated Aa1, is based on relatively low government debt liabilities, high debt-carrying capacity, and strong government financial assets.

Moreover, the ba rating for event risks reflects political risks arising from regional geopolitical dynamics that may affect Saudi Arabia’s ability to produce and/or export oil.

Moody’s stable outlook on the Kingdom indicates a balance of risks for the rating. Further progress in implementing large economic diversification projects could attract private sector participation and accelerate non-oil economic development faster than currently projected. At the same time, global growth and broader oil market developments are not expected to significantly increase public spending levels.