RIYADH, May 24 (Arab News): Saudi Arabia's economy is showing clear signs of resilience amid regional tensions, according to an analysis, demonstrating strong growth in the Purchasing Managers' Index, oil activities, the labor market, and equity markets.
In its latest report, Al Rajhi Capital highlighted that the Kingdom's PMI returned to expansion territory in April at 51.5, up from 48.8 in March, signaling continued momentum in non-energy private business growth.
In March, the Kingdom's PMI dropped below the 50 threshold after Iran's retaliatory strikes across the Gulf triggered the most severe business disruption in the region since the Covid-19 pandemic. The attacks led to widespread airport closures, suspended port operations, and sharp volatility in financial markets.
Strengthening a robust non-oil economy is crucial for Saudi Arabia as the Kingdom continues its economic diversification efforts by reducing its decades-long reliance on crude revenues.
The rebound in business activity comes as the Kingdom's economy continues to display resilience amid lower oil production and regional geopolitical tensions.
Citing flash estimates released by the General Authority for Statistics, the analysis said the Kingdom's real gross domestic product expanded 2.8 per cent year on year in the first quarter of 2026, driven by gains across all economic activities.
This increase in real GDP was driven by growth across all major economic activities, as non-oil activities rose by 2.8 per cent, oil activities recorded a 2.3 per cent increase, and government activities grew by 1.5 per cent year on year.
In April, the International Monetary Fund said Saudi Arabia's economy would grow 3.1 per cent in 2026, citing continued strength in domestic activity and reforms aimed at broadening the economic base.
According to Al Rajhi Capital, consumer activity was positive in March, with total spending reaching SR150 billion ($39.97 billion), up from SR133 billion recorded in February and SR141 billion in January.
E-commerce transactions posted robust growth of 28.4 per cent, reflecting shifting consumer preferences, while point-of-sale transactions edged up 0.7 per cent.
The rising number of POS transactions in Saudi Arabia underscores sustained consumer confidence and the ongoing shift toward digital payments, supported by the Kingdom's Vision 2030 reform initiative.
The momentum also marks a key milestone in the nation's transition toward a cashless economy, aligning with one of the core objectives of the Financial Sector Development Program under Vision 2030.
The data also signal resilient consumer confidence despite global economic uncertainties, providing crucial support to the Kingdom's broader economic transformation agenda.
According to the report, the labor market in the Kingdom also showed significant improvement, with the Saudi unemployment rate declining to 7.2 per cent in the fourth quarter of 2025 from 7.5 per cent in the previous three months.
The Kingdom's unemployment rate for the total working-age population aged 15 years and above stood at 3.5 per cent in the fourth quarter of 2025.
The unemployment rate among Saudi women declined year on year to 10.3 per cent, down by 1.6 per centage points compared with the fourth quarter of 2024.
Registered employees under the Social Insurance Scheme reached 13.67 million by the end of 2025.
Saudi Arabia's strengthening labor market aligns with the Kingdom's Vision 2030 program, the nation's strategic roadmap focused on creating job opportunities for citizens and driving economic growth.
Curbing joblessness remains a core pillar of the broader socio-economic reform agenda.
On the fiscal front, total government revenue fell 1 per cent year on year to SR261 billion in the first quarter, with oil revenues dropping by 3.4 per cent.
Total expenditure surged 20 per cent to SR387 billion, resulting in a quarterly fiscal deficit of SR126 billion.
Outstanding public debt stood at SR1.667 trillion, equivalent to approximately 33.6 per cent of GDP.
In terms of inflation levels, Saudi Arabia's consumer prices remained relatively stable in April, rising 1.7 per cent year on year.
Data from GASTAT showed that the Consumer Price Index edged up 0.2 per cent month on month in April, reflecting moderate increases across several categories, including food, housing, and transportation.
The housing, water, electricity, gas, and other fuels category remained the largest contributor to annual inflation, with prices rising 3.8 per cent from a year earlier. The increase was primarily driven by a 4.8 per cent rise in actual housing rents.
Separate data from the authority revealed that wholesale prices rose 3.3 per cent year on year in April, primarily driven by a 6.4 per cent increase in prices of other transportable goods, excluding metal products, machinery, and equipment.
The real estate sector cooled considerably in the first quarter of 2026, with both commercial and residential transaction values declining by 68 per cent and 66 per cent, respectively, year on year.
The residential property price index fell 3.6 per cent, while rental indices continued to rise.
In the equity markets, the Tadawul All Share Index slipped 0.6 per cent in April, while the parallel Nomu market gained 0.8 per cent. Software and services and pharma emerged as the best-performing sectors, Al Rajhi Capital added.
In May, another report by Kamco Invest said that Saudi Arabia's Tadawul All Share Index maintained its strong year-to-date momentum, delivering a significant 6.6 per cent gain in the first four months of this year.
The report revealed that Saudi Arabia was also the second-best-performing market in the Gulf Cooperation Council region after Oman's remarkable 42.7 per cent surge.
While TASI posted a marginal 0.6 per cent decline in April compared to March amid profit-taking and regional geopolitical tensions, the Kingdom's equity market continued to demonstrate resilience, backed by robust corporate earnings and sector-specific gains.
Analysts at Al Rajhi Capital noted that Saudi Arabia's non-oil economy continues to demonstrate strength and diversification momentum, even as the energy sector contends with short-term volatility.
The combination of recovering private-sector confidence, controlled inflation, and ongoing structural reforms provides a relatively stable foundation for the remainder of 2026.
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