Non-oil industries drive Saudi growth for 5th straight quarter

Expansion of Saudi Arabia’s non-oil economy – highlighted by construction, tourism and entertainment – is fueling a rebound in the kingdom’s finances amid falling petroleum prices.

Gross domestic product is expected to have expanded 3.9% in the second quarter of 2025 compared to the same period last year as Saudi Arabia and other OPEC+ states lifted production limits to stimulate sales.

It was the fifth consecutive quarter of growth for the overall economy after a 3.4% expansion in the first three months of the year, according to the Saudi General Authority of Statistics.

The kingdom’s non-oil economy, which Crown Prince Mohammed bin Salman set as the fulcrum of his Vision 2030 economic blueprint, grew 4.7% in the second quarter.

Meanwhile, oil continued to be the driving force in the economy, with the sector expanding 3.8%.

The Saudi economic rebound was reflected in the International Monetary Fund’s decision on Wednesday to raise its GDP forecast for this year to 3.5%, revised from its earlier prediction of 3%.

The kingdom “has demonstrated strong resilience to shocks, with non-oil economic activities expanding, inflation contained, and unemployment reaching record-low levels,” the IMF said.

Saudi $1 trillion in capital spending aims to shift economy

Saudi Arabia is headed into what Goldman Sachs terms a “capex super-cycle” as it plows more than $1 trillion into the economy and aims to strengthen industries outside the oil and gas sector.

In an analysis of the kingdom’s projected capital expenditures for the next five years, the New York-based investment bank expects about 73% to be spent on non-oil industries, up from its previous estimate of 66%.

Clean energy should get $235 billion in funding, up from a previous forecast of $148 billion, with the increase driven mainly by renewables as Saudi Arabia more than doubles its 2030 capacity target, Goldman Sachs said.

Saudi Arabia is also funding sectors that enable economic diversification away from oil, such as metals and minerals, transport and logistics, and digitalization, according to the report.

Strong non-oil economic growth driven by diversification efforts

Non-oil economic growth appears strong in the Middle East amid diversification efforts by Saudi Arabia, the UAE and other states, helped by government support and reforms to attract private capital, according to the latest PwC Middle East Economy Watch.

Oil prices are expected to drop this year amid supply and demand growth uncertainty.

“Strong growth in the non-oil sector is expected to counterbalance these impacts,” said Richard Boxshall, Partner and Chief Economist, PwC Middle East.

Inflation cooled in the GCC last year, with PwC composite data for the region averaging 2.6% and ending the year at 1.7% YoY, down from a post-Covid high of 4.3% in July 2022. 

Non-oil business activity picks up in Saudi Arabia and UAE

Non-oil business activity in Saudi Arabia and the UAE picked up quickly in February, according to new data.

The kingdom’s economy rose at its fastest rate in five months, reaching its highest level since September 2023 following a slump to a two-year low in January, according to Riyad Bank. Expectations towards future activity were buoyed, while supply chains remained supported despite ongoing conflict in the Red Sea.

Meanwhile in the UAE, the latest index from S&P Global noted the fastest upturn since June 2019, as 38% of monitored firms noted a month-on-month increase in activity from new business, stronger client activity and more marketing and development work.

Anecdotally, Dubai Mall — a landmark of the Gulf’s economic diversification efforts — welcomed 105 million visitors in 2023, a 19% uptick from the previous year, making it “the most visited place on Earth in 2023,” according to its developer Emaar. 

The Weekly Circuit: Saudi Arabia’s non-oil business + The accidental grocer

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Saudi Arabia’s non-oil business has propelled the kingdom to its swiftest job growth in nine years amid its continuing efforts to diversify its economy. October’s Riyad Bank purchasing managers index (PMI), released on Sunday, signaled that private businesses are contributing to growth, which slowed in the third quarter following oil production curbs that were implemented in July.

Saudi Arabia’s decision to constrict supply by 1 million barrels a day, together with Russia’s cut of 300,000 barrels, left the OPEC+ meeting in Vienna last June in disarray, coming on top of production curbs that the 23-member group adopted earlier in the year amid sagging oil prices and reduced demand from China, the world’s second-largest economy.

The UAE’s two-day annual meeting on national policy and goals wrapped up on Wednesday following sessions on artificial intelligence, hosting duties for the U.N.’s COP28 climate conference later this month and progress on the 50-year economic development plan known as Centennial 2071.
 
Some 500 dignitaries convened at the St. Regis hotel on Saadiyat Island in the largest government gathering of the year. The palm tree-lined beach enclave, connected by a bridge to downtown, is home to the Louvre Abu Dhabi – where works by Leonardo da Vinci and Edouard Manet hang – and the interfaith Abrahamic Family House.

WeWork entered a new chapter in its fall-from-grace saga as the SoftBank-backed firm sought U.S. bankruptcy protection on Monday. The debt-burdened startup that disrupted the multi-trillion dollar office space market sent an email to its 500,000 members overnight, offering reassurances that WeWork’s locations would remain open. It was signed by David Tolley, the CEO brought in last May to lead a turnaround.

With 660 locations in 119 cities worldwide, WeWork has kept a small footprint in the Middle East, opening only in the UAE and Israel, despite some of its biggest backers being from the Gulf. In 2017, Saudi Arabia’s Public Investment Fund and Abu Dhabi’s second largest sovereign fund Mubadala were the majority investors in SoftBank’s $93 billion Vision Fund I, pouring in $45 billion and $15 billion, respectively. Through the Vision Fund, SoftBank became WeWork’s biggest backer and today, it holds about a 60% stake in the embattled company. 

But there appear to be no hard feelings between Saudi Arabia and WeWork’s co-founder and former CEO Adam Neumann. The Israeli businessman appeared last month in Riyadh at the kingdom’s Future Investment Initiative — also known as “Davos in the Desert” — where he heard pitches from startup founders in the region and promoted his new real estate venture Flow. 

Welcome to The Weekly Circuit. Read on for the stories, deals and players driving the news across the MENA business landscape. Please send comments and story tips to [email protected].

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An accidental grocer has valuable lessons for doing business in the UAE

Jones the Grocer is a UAE institution. Favored by the President, Sheikh Mohammed bin Zayed, it has served breakfast, lunch and dinner to a cast of famous faces, including Hilary Clinton and Tony Blair. With locations now scattered around Abu Dhabi, Dubai, Riyadh and Doha, it began as a rare spot in Abu Dhabi that felt like a neighborhood café, Erica Elkhershi reports for The Circuit.

Goodbye trendiness: Much of the food and beverage industry in the Gulf is dominated by fast-casual franchises in large shopping malls and high-concept restaurants inside five-star hotels. The Jones café-markets are, by contrast, airy, with blue-and-white tile and a pronounced lack of trendiness: upmarket but not designed for Instagram.

Dinner parties: The menu is comfort food-focused: grilled steaks, heaping sandwiches, hearty soups. Large open shelves display gourmet foodstuffs for sale like olive oils, jarred chutneys and marmalades and dark chocolate line the walls. Its charcuterie boards are the mark of a good dinner party in Abu Dhabi; their Thanksgiving turkeys are a favorite of American expats, while the Aussies and Brits lean on Jones to outsource their Christmas roasts. With revenue of over $50 million across all stores, it’s one of the UAE’s local success stories that is about to go global.

Click here to read the full story.

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Abu Dhabi grants first civil marriage in move to modernize legal system

On Dec. 27, 2021, Abu Dhabi’s newly opened Non-Muslim Personal Status Court issued its first civil marriage contract to a Canadian couple — the first to marry under a new law on the personal status of non-Muslims in the capital of the United Arab Emirates, according to WAM, the country’s official state news agency.

In early November, UAE President and Emir of Abu Dhabi Sheikh Khalifa bin Zayed Al Nahyan made history for the federation of seven emirates when he issued a law to regulate personal status matters for non-Muslims in Abu Dhabi; the law provided an advanced judicial mechanism for the determination of personal status disputes for non-Muslims. 

Previously, all personal-status laws regarding marriage and divorce in Abu Dhabi were based on Islamic Sharia principles, as in other Gulf states. 

Under the new law, which contains 20 articles divided into several chapters, non-Muslims are allowed to marry, divorce and get joint child custody under civil law in Abu Dhabi. It also covers alimony, proof of paternity and inheritance.

After a divorce, the law says that joint and equal custody of children will automatically be granted to parents, with procedures set in place to settle disputes. 

The new Non-Muslim Personal Status Court in Abu Dhabi operates in both English and Arabic. 

Yousef Saeed Al Abri, Undersecretary of Abu Dhabi Judicial Department (ADJD), stressed according to WAM how “the establishment of civil marriage contract procedures for the first time before Abu Dhabi courts sets a qualitative precedent in the Arab region.”

Rabbi Levi Duchman, the first resident rabbi of the United Arab Emirates and head of the Jewish Community Center of the UAE, says the move is a reflection of the “tolerance and coexistence” that he sees in the country.

“We have been licensed since 2020 to conduct Jewish marriages in Abu Dhabi, and our marriages were always recognized,” Duchman told Jewish Insider. “Our marriages were always recognized by the UAE government, by the royal court and by the Ministry of Justice.”

In New York, for instance, one would have to have a Jewish marriage as well as a civil marriage. “Here in the UAE, we were licensed to do just a Jewish marriage that will also be recognized as a civil marriage,” Duchman added.

The law is the latest in a series of legal changes in the UAE at the federal level introduced in November 2020. Those include statutes to decriminalize premarital sexual relations and alcohol consumption and to cancel legal clauses allowing judges to issue overly lenient sentences in defense of “honor” killings — crimes that will now be treated by UAE courts as murder cases.

Given that nearly 90 percent of UAE’s population of 10 million people are foreigners, such moves make practical sense. Especially, as these reforms, in addition to the issuance of longer-term visas to select expatriates, have been viewed as a way for the UAE to make itself more attractive for foreign investment and extended residency. 

“I am from the United States and New York City and as the first resident Rabbi to reside in the UAE, from the day I landed seven years ago, I have seen the amazing openness, respect and tolerance of the government not just as a statement but in actions,” added Rabbi Duchman. “What we have here is amazing – we have our places of worship, government-certified Kashrut, a Jewish educational system. We are so lucky to have the community we have here and are profoundly thankful to the Emirati leadership for enabling all of this.”