Economy Oil price slump hits Saudi Arabia’s economic growth By Edmund Bower May 1, 2025, 5:24 PM Alamy via Reuters Depressed oil prices, falling to a four-year low, contributed to a slowdown in Saudi Arabia's economic growth in the first quarter Economic concerns rise Projections in question Borrowing likely to increase Growth in Saudi Arabia slowed in the first quarter of 2025 amid depressed oil prices and fears of an escalating global trade war. Figures released by the General Authority for Statistics on Thursday showed that the non-oil economy grew by 4.2 percent, while real GDP grew by just 2.7 percent. Oil activities contracted by 1.4 percent. Should this continue, Saudi Arabia will underperform adjusted projections. Saudi Arabia’s budget had predicted growth in the non-oil economy of 4.6 percent for the year. Last month, the International Monetary Fund (IMF) revised its predictions for real GDP growth in 2025 down from 3.3 percent to 3 percent. It also cut growth predictions for 2026 from 4.1 percent to 3.7 percent. The slump of oil prices has thrown Saudi Arabia’s growth projections in question. Brent crude traded at an average of $81 a barrel throughout 2024 but it hit a four-year low of $61 on Wednesday. Saudi Arabia to expand VAT base as oil prices fall IMF cuts Saudi GDP forecast as trade turbulence continues IMF praises GCC economic diversification efforts The IMF estimates that Saudi Arabia needs the price to remain above $91 for it to balance its books. The drop in oil prices is likely to lead to greater borrowing across the public sector. The Public Investment Fund, which manages assets worth about $940 billion and is responsible for a raft of so-called giga-projects across the kingdom, announced on Thursday the sale of $1.25 billion of sukuks. AGBI reported in March on widespread spending cuts across PIF companies. Register now: It’s easy and free AGBI registered members can access even more of our unique analysis and perspective on business and economics in the Middle East. Why sign uP Exclusive weekly email from our editor-in-chief Personalised weekly emails for your preferred industry sectors Read and download our insight packed white papers Access to our mobile app Prioritised access to live events Register for free Already registered? Sign in I’ll register later Register now: It’s easy and free AGBI registered members can access even more of our unique analysis and perspective on business and economics in the Middle East. Why sign uP Exclusive weekly email from our editor-in-chief Personalised weekly emails for your preferred industry sectors Read and download our insight packed white papers Access to our mobile app Prioritised access to live events Register for free Already registered? Sign in I’ll register later
