Saudi GDP Forecast to Grow by 3.7% in 2025

The GDP of Saudi Arabia is projected to grow by 3.7% y-o-y in 2025, continuing to outperform global GDP growth, which is forecast at 3.2% – a modest increase compared to 3.1% in 2024, according to the Mastercard Economics Institute.

In its annual report entitled “Economic Outlook 2025’ which identified themes that will shape next year’s economic landscape, the Institute said that consumer spending in the Kingdom is predicted to rise by 4.5%, and consumer price inflation is likely to reach 2%.

This growth is underpinned by robust non-oil economic activity. In line with Vision 2030, economic diversification efforts will continue as the government leverages strong balance sheets to finance investment in infrastructure.

“Private sector investment should also benefit from lower interest rates, supporting employment and domestic consumption. Population growth is an important driver of economic activity, and particularly private consumption,” the report noted.

Tourism is likely to remain a bright spot for the region’s economies as the GCC’s strong push to develop its tourism offerings has positioned it as one of the fastest-growing destinations in the world. In addition, the strength of the region’s USD-pegged currencies is fuelling the demand for outbound travel.

Chief Economist for EEMEA at Mastercard, Khatija Haque, said that with robust non-oil economic activity and continued investments aligned with Vision 2030, Saudi Arabia is set to maintain its strong growth trajectory, outpacing global markets.

“As we move into 2025, a year shaped by evolving fiscal and monetary policies, the Kingdom’s diversification efforts and supportive economic reforms will solidify its position as a key driver of regional economic expansion. These structural shifts will continue to redefine economic landscapes, charting new pathways for sustainable growth,” Haque added.

Migration and Money

Net migration contributed 4.4% to the population growth in the Kingdom between 2019 and 2023. Migration also generates substantial remittances, which serve as a lifeline between expats working in thriving economies, such as Saudi Arabia, and their families from low- and middle-income communities in developing economies.

The report highlighted a study from the World Bank that remittances surged from $128 billion in 2000 to $857 billion in 2023, with an estimated growth of 3% in 2024 and 2025.

Economic recovery and local reforms are expected to sustain remittance growth through 2025, while the continued digitisation of the payments industry allows recipients to shift to digital and mobile channels, resulting in considerable cost efficiencies, security and convenience.

Women Empowerment

The report said that the global economy saw the ‘great resignation’ turn into the ‘great return’. To varying degrees across countries, there has been a return of workers, particularly in the younger cohort and, interestingly, women.

The latest World Bank data shows that women’s representation in the Saudi work force grew from 18% in 2017 to 34.5% in 2023.

This marked increase is mainly due to the easing of social and other restrictions in the Kingdom in recent years, driven by its ambitious Vision 2030 that seeks to build a thriving economy where everyone has the opportunity to succeed.

There are several other potential explanations for this phenomenon as women’s labour force participation likely reflected the disproportionate job creation in female-dominated sectors, such as healthcare and education.

In addition, the rise of remote work and the flexibility it brings tends to help women, who are often still the primary caregivers, as it makes it easier to raise children while working. Many of these dynamics will remain true in 2025, with positive implications for the economy due to driving consumption growth by increasing households’ disposable incomes, the report said.