Saudi Arabia’s Non-Oil Economy Surpasses Oil for First Time

The announcement by Economy Minister Faisal Alibrahim marks a watershed moment in Saudi Arabia’s economic history, with non-oil activities reaching 56% of real GDP and surpassing both the oil sector and government spending for the first time. This structural shift represents the culmination of years of strategic planning under Vision 2030, the Kingdom’s ambitious blueprint to reduce dependence on hydrocarbon revenues and build a more diversified, sustainable economy. The milestone comes as Saudi Arabia projects strong GDP growth of 4.8-5.1% in 2025, accelerating to 6.5% in 2026, indicating that economic diversification is not only progressing but gaining momentum.

Minister Alibrahim’s interview with Bloomberg’s Joumanna Bercetche highlighted how this transformation reflects deeper structural changes within the Saudi economy. The crossing of this threshold—where non-oil activities now dominate economic output—validates the strategic direction set by Vision 2030 and demonstrates tangible progress in rebalancing the economic mix. For decades, oil revenues have been the primary driver of Saudi economic growth, but the current data shows a fundamental restructuring is underway, with private sector innovation and productivity gains beginning to bear significant fruit.

At the heart of this economic transformation lies Vision 2030, the comprehensive reform agenda designed to reduce Saudi Arabia’s dependence on oil and government spending by fostering private sector innovation, productivity, and technological advancement. Minister Alibrahim emphasized that the vision specifically targets strategic sectors including artificial intelligence, healthcare, energy, and defense as key drivers of future growth. These sectors represent the vanguard of Saudi Arabia’s economic modernization, combining technological sophistication with the Kingdom’s strategic advantages and investment capacity.

The progress under Vision 2030 has been remarkably swift, with Minister Alibrahim noting that some mega-project targets have been achieved years ahead of schedule. Particularly noteworthy are tourism targets that were met seven years early, demonstrating the effectiveness of the Kingdom’s implementation strategy and the responsiveness of both domestic and international investors to new opportunities. This accelerated achievement pattern suggests that the economic transformation may be gaining momentum faster than originally anticipated, potentially setting the stage for even more ambitious targets in the coming years.

The projected GDP growth rates of 4.8-5.1% for 2025 and 6.5% for 2026 significantly outpace global growth averages and indicate strong underlying economic momentum. These growth projections, coming alongside the structural shift toward non-oil dominance, suggest that Saudi Arabia is successfully navigating the complex transition from a hydrocarbon-dependent economy to a more diversified economic model without sacrificing growth momentum—a challenge that has proven difficult for many resource-rich economies.

The surpassing of oil by non-oil activities carries profound implications for Saudi Arabia’s economic resilience and global positioning. By reducing dependence on volatile oil markets, the Kingdom is building a more stable economic foundation that can withstand commodity price fluctuations while creating more sustainable employment opportunities for its growing population. The 56% non-oil contribution to real GDP represents not just a statistical milestone but a fundamental reorientation of the economic engine driving the nation forward.

Minister Alibrahim’s emphasis on technological advancement, particularly in AI, healthcare, energy, and defense, points to a strategic focus on high-value, knowledge-intensive sectors that can drive long-term competitiveness. This approach positions Saudi Arabia to compete in the global economy of the future rather than relying solely on its natural resource endowment. The early achievement of tourism targets—seven years ahead of schedule—demonstrates the effectiveness of this sector-specific targeting and suggests that other strategic sectors may also exceed expectations.

Looking ahead, the continued implementation of Vision 2030 appears poised to accelerate Saudi Arabia’s economic transformation. The strong growth projections for 2025 and 2026, combined with the structural shift toward non-oil dominance, create a virtuous cycle where economic diversification fuels growth, which in turn enables further diversification. As Minister Alibrahim’s announcement to Bloomberg makes clear, Saudi Arabia is not merely talking about economic reform—it is delivering tangible results that are reshaping the fundamental structure of one of the world’s most important emerging economies.