S&P Global Ratings has revised its outlook on Saudi Arabia to positive from stable, affirming its ‘A/A-1’ long- and short-term foreign and local currency unsolicited sovereign credit ratings. The revision reflects the potential for ongoing Vision 2030 reforms and investments to support the development of the non-oil economy while maintaining sustainable public finances. Despite volatility in the hydrocarbon sector, the ratings agency acknowledges Saudi Arabia’s strong non-oil growth prospects and economic resilience.
The positive outlook is driven by Saudi Arabia’s execution of Vision 2030 initiatives, expected to bolster non-oil growth over the medium term. If reforms lead to steady GDP per capita growth and continued momentum in non-oil sectors, there may be a potential rating upgrade. Improvements in institutions supporting economic transformation and domestic capital markets could further benefit the ratings.
Ratings could be raised if reforms result in consistent GDP per capita growth supported by sustained non-oil growth. Effective implementation of economic transformation and development of domestic capital markets may also positively influence the ratings. The revision to a positive outlook reflects Saudi Arabia’s strong economic performance and significant economic and social transformation under Vision 2030.
The Kingdom is diversifying away from oil dependency by investing in new sectors such as tourism, manufacturing, and logistics. Investments totaling over $1 trillion are expected to drive this diversification, with the Public Investment Fund (PIF) playing a key role in funding projects. Fiscal deficits are projected to average 2.4% of GDP through 2027, with public investment as a major driver of government spending growth.
Despite increasing debt, Saudi Arabia’s net government asset position remains robust, with gross general government debt projected to rise gradually. The Kingdom’s role as a major oil exporter and its leadership in OPEC+ provide resilience against global energy transitions. S&P’s outlook revision highlights confidence in Saudi Arabia’s economic reforms and long-term growth prospects.
Saudi Arabia is expected to see continued non-oil growth, particularly in sectors such as tourism and construction. The country’s net asset position is projected to remain strong, exceeding 40% of GDP through 2027. The government is anticipated to manage deficits through external debt issuances, including Eurobonds and sukuk, while maintaining a robust economic strategy that includes maintaining its position as a swing oil producer.
