Prime Highlights:
- Saudi Arabia’s non-oil private sector remained in growth territory in February, supported by strong domestic demand and steady project approvals.
- Businesses expanded hiring and reported rising new orders, reflecting confidence in near-term economic conditions.
Key Facts:
- The Riyad Bank Purchasing Managers’ Index stood at 56.1 in February, remaining above the 50 mark that signals expansion.
- Official data showed that non-oil activities grew 4.9 percent year on year in 2025, contributing to overall GDP growth of 4.5 percent.
Background:
Saudi Arabia’s non-oil private sector continued to grow in February, supported by strong domestic demand and steady project approvals, according to the latest Riyad Bank Purchasing Managers’ Index compiled by S&P Global.
The PMI stood at 56.1 in February, slightly lower than 56.3 in January, marking a nine-month low but still remaining well above the 50 mark that signals expansion. The reading shows that business activity across the Kingdom’s non-oil industries continues to expand despite a slight slowdown in momentum.
Economists said the growth reflects solid consumer demand, increasing project approvals and rising international sales. Naif Al-Ghaith, chief economist at Riyad Bank, said the sector maintained its expansion path even though output growth slowed to its lowest level since August.
He noted that steady domestic demand and a continuous pipeline of new projects helped support business activity. According to him, international sales have also increased for seven consecutive months, while the volume of new orders continues to improve.
Analysts say the expansion reflects the Kingdom’s ongoing efforts to diversify its economy under Vision 2030. Sami Abdul Hadi, co-founder of Vault, said domestic consumption, continuous hiring and a steady flow of projects are helping maintain momentum in the private sector.
He added that growth is taking place across several industries, including wholesale and retail trade, tourism, financial services, construction and business services. Increased public and private investment, stronger foreign direct investment and faster digitalization of commerce are also strengthening non-oil sectors.
Investment experts say regulatory reforms have also helped accelerate growth. Vijay Valecha, chief investment officer at Century Financial, said policies aimed at attracting foreign investment, easing ownership rules and expanding capital markets are encouraging private-sector development.
He added that sectors such as construction, technology, logistics and manufacturing are becoming a larger part of economic activity and employment as Saudi Arabia reduces its reliance on oil.
JPMorgan has reduced its 2026 non-oil growth forecast for Saudi Arabia by 0.2 percentage points, pointing to uncertainty caused by regional tensions.
Analysts say that during times of geopolitical tension, higher oil revenues can give the government extra financial support, helping it continue spending and support economic diversification plans.
