As per the latest seasonally adjusted Riyad Bank Saudi Arabia Purchasing Managers’ Index (PMI), Saudi Arabia’s non-oil private business sector remained firmly in growth territory in December 2025, although the pace of expansion eased to its slowest in four months, and new order growth continued to decelerate.
The ratio fell to 57.4 in December from 58.5 in November, indicating a cooling of growth for the second consecutive month. Despite the slowdown, the headline PMI reading was slightly stronger than its long-run average of 56.9. PMI readings above 50.0 indicate activity growth, while those below point to contraction.
“Output levels across non-oil businesses rose sharply, driven by increased new business, ongoing projects, and heightened investment spending. However, the rate of growth was the least pronounced since August. The new orders subindex retreated to 61.8 in December from November’s 64.6 reading, but the pace of expansion was the slowest in four months. Firms cited improving economic conditions and successful marketing campaigns as key drivers, but expressed concerns over market saturation,” reported Reuters.
“Export demand recorded a marginal increase for the fifth consecutive month, but the latest rise was the weakest in this sequence, suggesting that external demand remains supportive but uneven. Overall, demand conditions point to resilience rather than acceleration as firms navigate a more competitive environment,” said Naif Al-Ghaith, Riyad Bank’s chief economist, while interacting with the media outlet.
Employment growth remained strong, as businesses continued to expand their workforces. However, inflationary pressures intensified, with input prices rising sharply due to higher purchase costs, leading to increased output prices. Business confidence for 2026 was subdued, dampened by concerns over rising market competition, with only moderate expectations for future growth.
Meanwhile, as per the Standard Chartered Global Research analysis, the Kingdom’s GDP is expected to expand by 4.5% in 2026, outperforming the global growth average of 3.4%. The study sees sustained momentum in both the hydrocarbon and non-oil sectors, driving a robust outlook.
The forecast now places the Gulf major’s growth above that of many major economies, apart from broadly aligning with the International Monetary Fund’s October 2025 outlook, which projected Saudi Arabia’s GDP to expand by about 4% in both 2025 and 2026.
Mazen Bunyan, CEO of Standard Chartered, Saudi Arabia, said, “While the 2026 growth outlook for Saudi Arabia is strong, it comes with elevated downside risks to oil prices, a sector set to make a comeback in the next year. In this context, continued non-oil sector growth will ensure sustained financial stability whilst diversifying growth sources across the Kingdom.”
According to the report, the Gulf nation’s hydrocarbon sector returned to growth in 2025 after OPEC+ eased production cuts that had been in place since 2023. The non-oil sector, key to the Kingdom’s diversification efforts under “Vision 2030,” is also expected to expand steadily at 4.5%, supported by investment and consumption.