Saudi Arabia’s Economy Set to Soar
Saudi Arabia’s economy is on track to grow by 1.7 percent this year, with a promising outlook for 2025 and 2026, projected at 4.7 percent. This growth is fueled by government-backed initiatives aimed at diversifying the Kingdom’s economy, as reported by Moody’s.
Moody’s Bullish Forecast
Moody’s forecast surpasses previous estimates, including the Saudi government’s own projections. The credit rating agency’s outlook aligns with the Kingdom’s planned expenditure of $343 billion for 2025, highlighting a strong commitment to economic expansion through Vision 2030.
Focus on Diversification
The Kingdom is strategically investing in sectors such as technology, tourism, renewable energy, and infrastructure to reduce reliance on oil. The government’s emphasis on diversification is reflected in the large-scale “giga-projects” like NEOM, funded by the Public Investment Fund, to drive sustained economic growth.
Stable Inflation and Regional Outlook
Moody’s analysis projects stable inflation rates for Saudi Arabia, with positive growth forecasts for neighboring countries like the UAE and Egypt. The broader outlook for emerging markets is also optimistic, with steady growth and easing inflationary pressures.
Banking Sector Growth
Banks in the Gulf Cooperation Council region are poised for strong growth, supported by government initiatives to diversify the economy. Moody’s report highlights the potential business and lending opportunities for banks in Saudi Arabia, driven by major projects and upcoming events in the Kingdom.
Geopolitical Risks
Despite the positive outlook, Moody’s warns of potential profitability challenges for banks in emerging economies due to interest rate imbalances. Geopolitical tensions and shifts in US policy could also impact credit risks for banks in these regions.