The Tale of Two Kingdoms For half a century, the math was simple. If oil prices went up, Riyadh boomed. If oil prices went down, Riyadh busted. The entire national ledger was just a derivative of the Brent crude chart.
That correlation just broke.
The latest figures from the General Authority for Statistics (GASTAT) reveal a split-screen economy. The oil sector the historical lifeblood of the nation actually contracted by 1.4%. In the old days, that kind of drag would have sent the country spiraling toward a recession. But today? The total economy grew by 2.7%.
This is the "Great Decoupling." The non-oil economy surged 4.2%, effectively carrying the dead weight of the energy sector. This isn't just a statistical quirk; it is proof of concept. The massive liquidity injections into construction, retail, and wholesale trade are finally creating enough momentum to offset the production cuts OPEC+ has forced on the energy ministry.
To understand why this matters, you have to look under the hood. The growth isn't coming from finding more magic rocks in the ground; it is coming from activity.
The non-oil sector is being driven by a 3.2% jump in government activities. Critics will say this is artificial that it’s just the government recycling oil money. They aren't wrong, but they are missing the point. The government is acting as the "spender of last resort." They are deliberately running a deficit, estimated at 3% of GDP, to keep the cranes moving and the payrolls flowing.
For the "Aspirant" reader the local business owner or the expat contractor this is the signal you were waiting for. The government has signaled it will not turn off the tap just because oil revenue dips. They are prioritizing the Vision 2030 timeline over a balanced budget.
The Fiscal Safety Net How long can they keep this up? That is the trillion-dollar question.
The bears will point to the deficit. Spending more than you make is usually a fast track to a currency crisis. But Saudi Arabia has a fortress balance sheet. Their national debt is sitting below 35% of GDP.
To put that in perspective, the United States is drowning in debt over 120% of GDP. Japan is over 250%. Saudi Arabia has immense fiscal space. They can afford to borrow money, issue bonds, and burn cash for years to bridge the gap between the "Oil Era" and the "Diversified Era."
This low debt profile is their insurance policy. It allows them to absorb the shock of global energy price fluctuations without passing the pain down to the consumer immediately. The data shows that consumer spending and credit growth remain resilient. The average citizen isn't feeling the oil production cuts because the government is smoothing out the ride.
However, this creates a dangerous dependency. The non-oil growth is currently addicted to state spending. A 4.2% jump is impressive, but it is largely fueled by the state's capital expenditures (CAPEX) on Giga-projects like NEOM and the Red Sea.
If the government were to suddenly pull back say, due to a prolonged crash in oil prices to $40/barrel—that 4.2% growth would evaporate. The private sector is growing, but it hasn't yet taken the training wheels off. The construction boom is real, but it is state-sponsored. The retail boom is real, but it is fueled by state salaries.
We are watching a race. The Kingdom is racing to build a self-sustaining private economy before its fiscal buffers run low.
Analysts project the non-oil growth will hold steady at 4.4% for the rest of 2025. This suggests the momentum is real. The oil sector will likely continue to act as a drag on the headline numbers because OPEC+ is committed to keeping supply tight to support prices.
Expect the headlines to be messy. You will see "Oil GDP Falls" next to "Saudi Economy Grows." Don't let the contradiction fool you. It is the sound of an economy changing its engine while the car is still moving down the highway at 100 miles per hour. It is risky, it is expensive, but for now, the data says it is working.