S&P Global has upgraded Saudi Arabia’s long-term credit rating to A+, citing improvements in governance and economic reforms under Vision 2030. The agency highlighted that Saudi Arabia’s policies now align with other nations in the ‘A’ rating category.
The Kingdom’s efforts to reduce its dependence on oil have played a key role in this upgrade. Although oil revenues have declined, adjustments in infrastructure spending help maintain financial stability. Additionally, strategic investments continue to support economic diversification.
Vision 2030 and Economic Diversification
Saudi Arabia is actively investing in tourism, manufacturing, green energy, and mining. These initiatives aim to strengthen domestic consumption, particularly among the country’s youthful population of over 35 million. Moreover, they contribute to reducing economic reliance on hydrocarbons.
Key achievements under Vision 2030 include:
- Completion of 87% of the 1,064 economic targets set in 2016.
- Tourist arrivals exceeding 100 million annually.
- Women’s employment surpassing 30%, fostering a more inclusive workforce.
With flexible policies and ongoing adjustments to project timelines, Saudi Arabia is steadily building a resilient economy. As a result, job creation is increasing, and workforce participation is expanding.
Economic Growth and Stability
S&P expects Saudi Arabia’s economy to grow at an average rate of 4% from 2025 to 2028. This growth will be driven by non-oil sector expansion, higher oil output, and increased investment in construction and services. Notably, the non-oil sector now accounts for 70% of GDP, up from 63% in 2018.
Although a fiscal deficit of 4.8% of GDP is projected for 2025, Saudi Arabia is expected to remain a net external creditor. While oil prices are forecasted to decline to $70 per barrel by 2028, non-oil growth and capital market expansion should help offset this challenge.
The currency peg to the US dollar, in place since 1986, will remain unchanged. This policy ensures monetary stability, and Saudi interest rates will continue to align with US Federal Reserve policies to manage inflation effectively.
Capital Market Growth and Tadawul’s Role
S&P expects Saudi Arabia’s stock exchange, Tadawul, to play a crucial role in financing Vision 2030. The government is working to enhance market liquidity and investor confidence through new investment laws and pension fund reforms.
Key highlights of Tadawul’s growth:
- Market capitalization has risen by 70% since 2019, excluding the $2 trillion Aramco IPO.
- At 245% of GDP in 2024, Tadawul is the largest equity market in the Middle East and one of the top 10 globally.
- Foreign participation is currently at 5%, presenting future opportunities for international investors.
With strong non-oil growth, rising private sector investments, and ongoing reforms, Saudi Arabia is well-positioned for long-term economic diversification and stability.
