Saudi Arabia projected to sustain 4.5–5.5% non-oil growth: Moody’s
Credit agency highlights strong private investment, major events, and diversification reforms as key drivers of long-term momentum
RIYADH, Saudi Arabia (MNTV) — Saudi Arabia’s non-oil economy is expected to maintain robust growth between 4.5 and 5.5 percent annually over the next five to ten years as Vision 2030 reforms accelerate and mega projects advance, according to a new report by Moody’s Investors Service.
The agency said sustained expansion in services, tourism, and construction — supported by major global events such as the 2027 AFC Asian Cup, Expo 2030, and the 2034 FIFA World Cup — will reinforce the Kingdom’s diversification momentum and attract long-term private investment.
Moody’s expects the Saudi government to sustain high spending on diversification despite moderating oil prices, leading to “moderate fiscal deficits” and an increase in public debt from 26 percent of GDP in 2024 to over 36 percent by 2030.
The agency highlighted that strong credit demand linked to Vision 2030 initiatives and the housing sector has pushed the loan-to-deposit ratio of Saudi banks above 100 percent for the first time since 2021, as funding requirements outpace deposit growth.
“While domestic deposits continue to rise, mainly from government entities and large corporates, credit expansion remains faster,” Moody’s noted, adding that banks have increasingly turned to capital-market issuance and syndicated loans to meet financing needs.
“Non-oil economic growth, particularly in services, will remain strong as large-scale projects are implemented and start to commercialize,” Moody’s said in its report, while noting that progress on some flagship initiatives remains uneven due to supply bottlenecks and tighter financing conditions.
Total bank issuance reached SR56 billion ($14.9 billion) in 2024, up sharply from SR21 billion the previous year. Similar issuance levels are expected through 2025 before easing as credit and deposits stabilize.
To reinforce financial resilience, the Saudi Central Bank (SAMA) has introduced a 100-basis-point countercyclical capital buffer effective in 2026 and continues to monitor foreign-currency liquidity and stable-funding ratios. These measures, Moody’s said, may temper loan growth but will strengthen the sector’s stability.
The Saudi Real Estate Refinance Co. (SRC) has also expanded its role, acquiring about 4 percent of the national mortgage market and launching the Kingdom’s first residential mortgage-backed security (RMBS) in August 2025 for local investors, easing liquidity pressures on lenders.
However, Moody’s cautioned that market funding introduces its own vulnerabilities, with foreign liabilities nearly doubling since 2020 and the banking system’s net foreign-asset position turning negative in 2024.
Investment outlook and Vision 2030 pipeline
In a separate report, Moody’s said reforms and investments are driving growth across multiple non-oil industries — including hospitality, retail, manufacturing, mining, and real estate — though rising borrowing needs could lead to uneven credit outcomes.
The agency estimates cumulative private-sector investments of nearly SR8 trillion ($2.13 trillion) will be required by 2030 to sustain the growth trajectory.
The Public Investment Fund (PIF) will remain pivotal, contributing about SR1 trillion in fresh investments by 2030 on top of SR642 billion invested over the past five years.
Saudi Arabia’s energy transition goals — targeting a 50/50 split between renewables and gas by 2030 — will demand significant capital.
Moody’s estimates SR750 billion ($200 billion) of total investment in the utilities sector between 2019 and 2030, with around SR440 billion already launched under the National Renewable Energy Program.
Broad consensus on growth outlook
Other credit rating agencies, including Fitch Ratings, BMI, and Strategic Gears, share similar expectations, forecasting an average non-oil growth rate of around 4.5 percent in the medium term. The outlook is underpinned by rising exports, a thriving tourism sector, and steady private-sector participation.
The Saudi Ministry of Finance, in its pre-budget statement released on September 30, projected real GDP growth of 4.4 percent in 2025 and 4.6 percent in 2026, driven by a 5 percent increase in non-oil activity, resilient domestic demand, and expanding employment opportunities.
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