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Oil output hikes are projected to drive 4.8% growth in the Saudi economy in 2025, up from 1.1% in 2024, as Opec+ begins phasing out production cuts, Zawya reports citing an Institute of International Finance (IIF) report. “We expect Saudi Arabia’s oil production to increase by 8.4% in 2025, as compared with a cumulative decline of 14.6% in 2023-2024,” the report said.
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At same time, non-oil GDP growth is expected to “remain robust at 4.6%,” as private consumption and large infrastructure investments led by the Public Investment Fund (PIF) and the National Development Fund boost the non-oil sector. Meanwhile, geopolitical turmoil has not had a discernible impact on Saudi’s economic growth, with investments in megaprojects expected to sustain growth over the next two years, the report added.
Capital outflows are projected to hit USD 80 bn this year, largely on the back of foreign investments by PIF, the IIF noted. The number brings the tally of public foreign assets — including official reserves and PIF foreign assets — to USD 1.3 tn, or 117% of GDP. Despite progress on investment reforms intended to lure in foreign investors, including simplified licensing procedures and 100% foreign ownership, FDI figures for Saudi are lower than those of the UAE.
REMEMBER- The PIF is working to reduce overseas exposure from 30% to 18-20%, shifting focus to support domestic diversification projects and encourage co-investment from foreign firms within the Kingdom. The fund has sold down big stakes in US equities, including stakes in BlackRock, Carnival, and Live Nation, reducing US-listed holdings to USD 20.6 bn in mid-2024 from USD 35 bn in 2023, the Financial Times reports. Additionally, the fund is imposing stricter conditions on external managers and encouraging partnerships aligned with national priorities.
