Saudi Arabia's economy has demonstrated strong resilience to global economic shocks, with non-oil activities expanding, inflation contained, and unemployment reaching record-low levels, according to the International Monetary Fund (IMF). These developments are in line with the targets of Vision 2030, the IMF said in its 2025 Article IV Concluding Statement. This statement was issued by IMF staff following their visit to discuss the Kingdom's 2025 Article IV consultations. The Saudi Ministry of Finance welcomed the IMF statement, which remarked that "given the current heightened global uncertainty, continued efforts on structural reform are essential to sustain non-oil growth and drive economic diversification." The IMF staff praised the government's efforts to strengthen the sustainability and resilience of public finances. Inflation remained contained, edging up slightly to 2.3 percent in April 2025, with expectations that it will stay anchored around 2 percent. The statement noted that inflation is contained as rent inflation decelerated. Despite a small pick-up to 2.3 percent in April 2025, headline inflation remains low, helped by high real interest rates. Declining prices for transport and communication helped offset housing rent inflation. The IMF attributed price stability to the credible SR-US dollar peg, continued domestic subsidies, declining transport and communication costs, and a sustained slowdown in housing rent inflation. Imported inflation linked to higher global tariffs is expected to remain under control. Despite elevated global uncertainty, strong domestic demand continues to support economic growth, reflecting ongoing implementation of Vision 2030 projects through public and private investment and buoyed by robust credit growth. "Robust domestic demand—including from government-led projects—will continue to drive growth despite heightened global uncertainty and a weakened commodity price outlook. Non-oil real GDP growth is projected at 3.4 percent in 2025, about 0.8 percentage points lower than in 2024," the statement said while noting that this reflects the continued implementation of Vision 2030 projects through public and private investment, as well as strong credit growth, which would help sustain domestic demand and mitigate the impact of lower oil prices. The IMF commended the Saudi Central Bank (SAMA) for enhancing its liquidity management framework and welcomed its ongoing efforts to strengthen regulatory and supervisory frameworks, which are key to preserving financial stability. The statement reviewed structural reforms undertaken since 2016. New legislation that came into effect in 2025, including the updated Investment Law, amendments to the Labor Law, and the new Commercial Registration Law, is expected to boost contractual certainty, improve the business environment, raise investor confidence, and support productivity gains. The IMF emphasized the importance of sustaining reform momentum regardless of oil price trends. Strengthening fiscal institutions and prioritizing the medium-term fiscal framework are seen as essential to achieving Vision 2030 goals. The statement also noted that the banking sector remains resilient, with a capital adequacy ratio of 19.6 percent at the end of 2024. Despite higher funding costs, bank profitability remains strong, with average return on assets at 2.2 percent and non-performing loans at their lowest level since 2016. The statement highlighted that, in 2024, non-oil real GDP grew by 4.2 percent, primarily driven by private consumption and non-oil private investment, with retail, hospitality, and construction leading growth. Repeated extensions of the OPEC+ production cuts have kept oil output at 9 million barrels per day (mb/d)—the lowest level since 2011— resulting in a 4.4 percent decline in oil GDP and an overall real growth rate of 1.8 percent. The composite PMI indicates sustained activity in Q1 2025, with the latest Q1 GDP estimate showing non-oil activities expanding by 4.9 percent year-on-year The IMF observed that the labor market's strong momentum would continue. The unemployment rate for Saudi nationals has declined to a record low of 7 percent in 2024, surpassing the original Vision 2030 target, which has now been revised down to 5 percent. The improvement is broad-based, with both youth and female unemployment halved over a four-year period. Private sector employment surged by 12 percent on average in 2024, while public sector hiring continued to slow, reflecting a redeployment to non-government entities.
