Fresh off being named 2024 Asset Manager of the Year at the recent Saudi Capital Market Awards, Jadwa Investment has released its Saudi Economy in 2025 macroeconomic report.
Saudi Arabia’s General Authority for Statistics (GASTAT) recently reported that the kingdom’s real GDP grew by 4.4% y-o-y in Q4 2024, the highest growth rate in two years, driven by a 4.6% rise in non-oil GDP, while oil GDP also increased by 3.4%.
In Jadwa Investments, The Saudi Economy in 2025 report, Jadwa notes that the globe avoided a hard landing in 2024:
“In 2024, US growth remained robust, at around 2.8 percent, similar to the performance in 2023, supported by private consumption, loose fiscal policy and healthy corporate balance sheets. The US is running a budget deficit of around 7 percent of GDP, which is substantial given the tightness of the labour market in recent years. The labour market has started to loosen but not dramatically.
Meanwhile, China slowed, with growth of 5 percent in 2024 as the problems in the property sector continued, casting a shadow on the consumer. Government stimulus boosted the economy in Q4 when growth hit 5.4 percent, allowing China to beat IMF and consensus estimates. The manufacturing sector and exports remained the key support to growth as China continued to take market share in global
goods trade. China now accounts for 17 percent of global export volumes.Eurozone growth, which plummeted in 2023, to 0.4 percent, registered some improvement in 2024, but growth remained below 1 percent, hampered by high living costs, competitiveness challenges and, in many countries, high debt levels. There are differences within the Eurozone, with southern European countries faring better, while Germany, the Eurozone’s largest economy, suffered another contraction in 2024 with weaker exports to China and fierce competition from China in global auto sales. The UK has followed a similar pattern to the Eurozone, with growth around 1 percent in 2024.
Emerging Market growth continued at just above 4 percent in 2024. Growth in India slowed after a stellar 2023, but nonetheless remains above 6 percent. Amongst other large EMs, growth slowed sharply in Turkey as interest rates spiked to combat inflation. “
Looking to 2025 and the Saudi economy specifically, Jadwa forecasts:
- Saudi Arabia’s non-oil economy continues to expand at a brisk pace. We forecast real non-oil GDP growth of 4.4 percent in 2025, firming from a preliminary 4.3 percent in 2024. Growth will be driven by both consumption and investment, with net exports a drag.
- We expect growth to be broad-based, with strong momentum in ‘wholesale and retail trade, restaurants and hotels’, ‘transport and communication’, ‘construction’ and ‘finance and insurance’. We expect further growth in tourism and gains in non-oil manufacturing, boosted by efforts to localize production and develop supply chains.
- In 2025 we expect oil GDP to grow by 2.6 percent in line with our forecasts for crude oil production and refinery output. There is downside risk to this assumption as OPEC+ could further delay its planned increases if it perceives risks to global demand.
- We forecast Brent crude oil prices at $75pb in 2025 and in 2026 on average, down from $80pb in 2024. Saudi Arabia’s main export blend, Arab Light crude to Asia, will enjoy a $1-$2pb premium over Brent.
- Saudi Arabia will run budget deficits at around 3 percent of GDP in 2025-2026, with government debt rising but remaining relatively low at less than 35 percent of GDP.
- The current account will slip into small deficits, but central bank reserves will remain high, in excess of $400 billion.
- Key risks to the outlook stem from external factors, including uncertainty over the new US administration’s policy mix; geopolitical risks; and whether China’s stimulus efforts will cushion the country’s structural economic slowdown. The Saudi economy would be impacted if external factors cause weaker-than-expected oil demand or tighter global financial conditions.
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