The private sector enhances Saudi Arabia’s growth among the “20” economies

Driven by the momentum of the private sector and the expansion of non-oil activities, Saudi Arabia is heading to lead the G20 economies in terms of growth in 2027, ahead of India, which is expected to record growth of 7 percent, compared to 7.9 percent for the Kingdom, according to International Monetary Fund forecasts issued last week. The difference in expectations reflects the transformations taking place in the Saudi economy, supported by regulatory and legislative reforms, and the expansion of investment opportunities. According to the Saudi Ministry of Investment, the Kingdom’s topping of the growth expectations of the G20 countries in 2027 at 7.9 percent reflects the strength and flexibility of the economy, and opens broader horizons for investment and growth, supported by the momentum of the private sector and the expansion of non-oil activities, moving towards a more diversified, sustainable, and investment-attractive economy.

The International Monetary Fund had raised its forecast for real GDP growth in the Kingdom to 7.9 percent, compared to 5.5 percent in its estimates issued in July, an increase of 2.4 percentage points, in a review that reflects the prospects for recovery after the repercussions of the war, and trade and energy disturbances. This performance reflects the structural transformations that the Saudi economy is witnessing within the framework of “Vision 2030”, with the growing contribution of non-oil sectors in driving growth and enhancing the Kingdom’s ability to confront global economic challenges, at a time when attention is turning to sustaining this momentum and translating it into new investment and job opportunities.

Former Shura Council member and economic expert, Dr. Fahd bin Juma, believes that Saudi Arabia’s topping of growth forecasts among the G20 economies reflects a structural transformation in the economy, going beyond the traditional reliance on oil revenues, with the growing role of the private sector as one of the main engines of economic activity, benefiting from regulatory and legislative reforms, expanding investment opportunities, and an increasing contribution of non-oil activities.

Bin Jumaa told Asharq Al-Awsat that this transformation embodies the gradual transition of the Saudi economy from the stage of direct government stimulus to building a more diversified production base and the ability to generate growth.

He added that the momentum witnessed by the private sector is linked to major government investments that contributed to creating the economic environment and opening new sectors to local and international investors.

He explained that strategic projects in the sectors of tourism, industry, logistics and technology have begun to stimulate economic activity that goes beyond the scope of the projects themselves, with the effects of investment spending extending to supply chains and small and medium enterprises, expanding business opportunities and enhancing the contribution of broader segments of the economy to growth.

In his estimation, the real value of this performance does not lie in topping the growth ranking among major economies as much as it lies in the ability to sustain it in the coming years. He said, “The main challenge is to transform economic expansion into long-term productivity gains, by increasing the efficiency of national facilities, enhancing non-oil exports, developing skills, and raising the contribution of private investments independent of government spending.”

Bin Jumaa pointed out that continuing to work on these paths puts the Saudi economy at a more advanced stage of diversification, where progress is not limited to achieving high growth rates, but extends to building a more flexible, competitive economic base capable of generating added value and sustainable job opportunities.

In turn, the head of the Saudi Governance Center, Nasser Al-Sahli, believes that Saudi Arabia’s progress in growth expectations among the G20 countries reflects the cumulative impact of the economic reforms that the Kingdom has implemented over the past years, and not just a passing improvement in the performance of a particular sector.

Al-Sahli told Asharq Al-Awsat that developing legislation, facilitating doing business, expanding investor participation, and restructuring a number of sectors all contributed to building an economic environment more capable of attracting investments and turning them into productive activities, noting that the growth of the role of the private sector represents an indicator of the impact of these reforms being transmitted to the real economy.

He explained that the importance of these transformations is increasing in light of the geopolitical challenges, global trade and energy disruptions, and the risks associated with the strategic sea lanes in the region.

He added that the expansion of the base of non-oil activities enhances the economy's ability to diversify sources of income and reduce its vulnerability to external fluctuations.

Al-Sahli said, “Economic diversification does not mean complete separation from global changes, but rather building a production and investment system capable of adapting to them and maintaining business continuity in different circumstances.” He added that the next stage will test the ability of the Saudi private sector to move from benefiting from the opportunities provided by government projects to leading an independent and sustainable investment expansion.

According to Al-Sahli, this requires raising productivity, enhancing competition, expanding access to financing, stimulating innovation, and increasing the presence of national companies in foreign markets. He stressed that the strategic importance of the Kingdom’s progress in growth expectations is not limited to its position among the G20 economies, but rather is linked to its ability to transform this momentum into a more diversified and efficient economy, led by a private sector capable of generating quality jobs and sustainable added value.

According to the latest International Monetary Fund report, India ranked second among the G20 countries, with an expected growth rate of 7 percent, followed by Indonesia with 5.1 percent, then China with 4 percent, and Turkey with 3.6 percent, according to Fund data reviewed by the ministry. Argentina ranked sixth with an expected growth of 3.5 percent, followed by South Korea with 2.8 percent, then the United States with 2.3 percent. Expectations for Brazil were 1.9 percent, Mexico 1.8 percent, Canada 1.7 percent, Australia 1.6 percent, South Africa 1.3 percent, and the United Kingdom 1.2 percent. Germany recorded an expected growth of 1.1 percent, Russia 0.9 percent, while expectations for France and Japan were 0.7 percent each, and Italy came in last place with 0.6 percent.

US stock futures rose on Wednesday, as investors evaluated the latest corporate business results, at a time when oil prices continued to rise, amid the repercussions of the Iranian war and the risks facing energy supplies.

Standard & Poor's 500 futures rose by 0.2 percent, while Nasdaq futures rose by 0.4 percent.

On the other hand, Dow Jones Industrial Average futures settled near their previous levels, according to Reuters.

Strong expectations for corporate profit growth have pushed the US stock market to record levels, despite continued high inflation, increased interest rates and other challenges facing the markets.

SpaceX shares jumped more than 8 percent, before the opening of trading, after the company, led by Elon Musk, announced quarterly profits that exceeded market expectations, supported by strong growth in satellite communications and artificial intelligence activities.

Musk said that SpaceX and Tesla had formed “special committees” to discuss the possibility of merging the two companies, but he downplayed the chances of an imminent deal being completed.

On the other hand, Netflix shares fell by more than 6 percent during trading prior to the market opening, after the streaming company lowered its advertising sales expectations on Tuesday, raising concerns about slowing revenue growth. Despite this, the company, which last week announced plans to lay off employees, recorded profits in the third quarter that exceeded Wall Street expectations.

Investors' attention is directed to the results of a number of major companies. Among them are “Mitta” and “Tesla”, which is scheduled to be announced on Wednesday.

In energy markets, oil prices rose as the repercussions of the Iranian war continued, while fuel costs increased due to the risks associated with passage through the Strait of Hormuz.

The price of Brent crude, the global standard, rose by 1.3 percent to $110.21 per barrel on Wednesday, after approaching, in Tuesday’s session, $112, recording levels approaching the highest since the outbreak of the war with Iran late last February.

Brent prices fluctuated during the current month between $97 and $112 per barrel, amid uncertainty about when the energy sector will return to normal conditions.

US West Texas Intermediate crude also rose by 1.6 percent to $99.40 per barrel.

In Europe, the German DAX index rose by 0.7 percent to 25,489.81 points, the French CAC 40 index rose by 0.6 percent to 7,888.32 points, and the British Financial Times 100 Index increased by 0.1 percent to 10,741.70 points, while the performance of Asian markets was characterized by variation.

In the currency market, the US dollar fell to 158.08 yen, compared to 158.17 yen in the previous session. The euro also fell to $1.1233, compared to $1.1239.

US President Donald Trump is seeking to convince voters, before the midterm elections scheduled for November 3, that the US economy is making great strides. But voters say inflation remains a challenge, as the Iran war has sent gasoline prices soaring while grocery bills remain high, and high interest rates have made it more difficult to buy a home or a new car.

The economy does not appear as strong as Trump portrays at election rallies, nor as weak as consumer confidence surveys suggest. But the combination of inflation, inequality and stock market gains makes the economy's performance unsatisfactory for most Americans, and it has fallen short of Trump's promises, according to the Associated Press.

Here is a closer look at the most prominent economic indicators:

- Inflation is 3.7 percent annually and is rising under Trump

Voters expected Trump to stamp out inflation. In his inaugural address last year, the Republican president pledged: “I will direct all members of my Cabinet to harness the enormous potential at their disposal to eliminate the record inflation we have seen and quickly reduce costs and prices.”

At a campaign rally in Vandalia, Ohio, on October 3, Trump told attendees: “We have almost no inflation.” But Ministry of Labor reports do not support this statement.

The consumer price index was rising at an annual rate of 3 percent in January 2025, when Trump returned to the White House. Inflation continued to slow until April 2025, when Trump announced the imposition of a wide range of tariffs, so prices began to rise again. Inflationary pressures increased this year with the outbreak of the Iranian war.

Inflation has not returned to the maximum levels recorded during the term of former President Joe Biden. But the data clearly show that the trajectory of inflation, which had been trending downward, has been rising erratically under Trump. The latest CPI report released before Election Day showed inflation at 3.7 percent over the past 12 months.

- GDP growth is just over 2 percent

A consumer confidence survey conducted by the University of Michigan shows that Americans are less confident in the economy now than they were during the “Covid-19” pandemic in 2020 or the financial crisis in 2008. But the United States, unlike those periods, is not experiencing an economic recession.

Gross domestic product, the most comprehensive measure of economic growth, has recorded annual growth of just over 2 percent under Trump. This is a good rate, but it is lower than the pace of growth recorded by the economy during the term of his Democratic predecessor.

Yet Trump continues to tell voters that the economy is experiencing unprecedented growth. The Republican president also talks about record levels of foreign investments, in statements that mix exaggeration and wishful thinking.

“We have growth of the kind we have never seen before, and we will have growth of the kind we have never seen before,” Trump said last week, during an election rally in Arizona.

- Unemployment is low... but job growth is slowing

The unemployment rate remained at 4.2 percent, an indicator of the health of the economy. Trump inherited a low unemployment rate that continued during his presidency, in light of conditions described by many economists as characterized by both low hiring and layoff rates.

Trump likes to say that the number of jobs in the United States has never reached higher levels in its history, but that is largely due to population growth, not his policies.

Employers are adding, on average, about 39,000 jobs per month during Trump's second presidential term. This number is much lower than the average monthly job gains in the year before his return to the White House, when it exceeded 121,000 jobs.

One of the factors that contributed to the slowdown in job growth was Trump's tightening of anti-immigration measures, which led to a decrease in the number of people looking for work. The unemployment rate among those born in the United States has remained largely stable, which indicates that Americans are not holding the jobs that were previously held by immigrants.

- Borrowing costs rise

With the national debt growing, inflation remaining at high levels, and energy price jumps associated with the Iran war, it has become more expensive to borrow money to buy a house, a car, or to cover other basic needs.

The yield on ten-year US Treasury bonds exceeded 5 percent, after recording its highest levels since 2002. This increases the cost of borrowing for individuals, and makes it more expensive for the US government to repay its bond debt.

- Stocks continue to record record levels

Trump boasts that stock markets have continued to hit record highs during his presidency, although Biden could have made similar claims during his term. The Standard & Poor's 500 index has risen by about 12 percent since the beginning of this year, after rising by about 16.4 percent last year. But the index had risen by 23.3 percent during 2024, before Trump assumed the presidency.

The performance of the stock market is not determined by presidential policies alone, as the growth in technology company stocks has contributed to supporting the broader market. Trump's tax cuts may have helped boost corporate profits, at a time when federal revenues from corporate taxes fell by 16 percent last year, according to the Congressional Budget Office.

- Widening inequality gap

Since Trump returned to the White House, the wealth of the richest 0.1 percent of American households has risen by $5.5 trillion in just 18 months, according to Federal Reserve data. In contrast, the wealth of the bottom half of households, i.e. 50 percent of them, increased by $380 billion.

This means that the net worth of the median household in the bottom half rose, on average, by about $5,600 during the Trump presidency. As for the richest 0.1 percent of families, their net worth increased, on average, by $40.8 million, more than 7,000 times the average increase recorded by families in the bottom half.