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S&P and Moody’s stay ‘positive’ on Saudi Arabia’s non-oil reforms

By Pramod Kumar
Saudi solar power Reuters/Faisal Al Nasser
The non-oil sector will remain strong through 2026 due to service sector growth supported by ongoing social reforms

S&P Global has raised its sovereign credit ratings on Saudi Arabia to A/A-1, with a stable outlook.

The upgrade results from the kingdom’s significant reform efforts in recent years, structural improvements pushing non-oil sector growth, improving public finance management and maintaining a balanced public debt level.

The kingdom’s real GDP growth stood at 8.7 percent in 2022, the highest among the G-20 economies, S&P said.

However, the rating agency anticipated moderate economic expansion, averaging 2.6 percent in 2023-2026, with GDP per capita averaging $31,500 – significantly beyond pre-pandemic levels – state-owned SPA news agency reported.

The non-oil sector will remain strong through 2026 due to service sector growth supported by significant ongoing social reforms and female workforce participation. The kingdom will see fiscal surpluses continue through 2024 after reaching 2.5 percent of GDP in 2022.

Meanwhile, Moody’s affirmed its A1 rating for the kingdom and revised the stable outlook rating to positive, thanks to the government’s track record of fiscal policy effectiveness and sweeping regulatory and economic reforms.

The agency lauded the critical role of the government-backed diversification projects and initiatives, backed by private sector investment and their positive impact on economic growth.

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