Fitch Ratings has affirmed Saudi Arabia’s credit rating at A+ with a stable outlook, attributing this to the Kingdom’s strong fiscal and external balance sheets.
Saudi Arabia’s Credit Rating
Fitch highlighted Saudi Arabia’s robust government debt/GDP ratio and sovereign net foreign assets (SNFA), which are significantly stronger than the ‘A’ and ‘AA’ medians. The agency also emphasized Saudi Arabia’s fiscal buffers, including deposits and other public-sector assets.
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While acknowledging improvements in oil dependence, governance indicators, and vulnerability to geopolitical risks, Fitch noted these remain relative weaknesses. The agency also praised the wide-reaching social and economic reforms under Vision 2030, which are helping diversify the Kingdom’s economy.
Fitch forecasts that Saudi Arabia’s SNFA will reach 63.7% of GDP in 2024-2025, well above the ‘A’ median of 8.7%. The agency noted that fiscal reforms aimed at reducing oil price volatility’s impact could further enhance the Kingdom’s rating. Fitch also expects strong growth in non-oil exports, particularly in the travel sector, which will contribute to reducing the services balance deficit.
Saudi Economy
Saudi Arabia’s economy grew by 1.3% in 2024, largely driven by a 4.3% rise in non-oil activities and a 2.6% increase in government activities, according to the General Authority for Statistics (GASTAT). However, the oil sector contracted by 4.5%.
In Q4 2024, real GDP growth surged to 4.4% year-on-year, the highest quarterly growth in two years. Non-oil activities led this growth, with a 4.6% rise, while the oil sector grew by 3.4%. Government activities increased by 2.2%.
The non-oil private sector showed strong growth in December, supported by domestic demand and a surge in exports, despite a slight moderation in overall growth. The Riyad Bank Saudi Arabia Purchasing Managers’ Index (PMI) dropped to 58.4 in December from a 17-month high of 59 in November, signaling continued expansion.
Outlook and Inflation
Saudi Arabia has revised its GDP growth forecast for 2025 to 4.6%, down from 5.7%, with the 2026 forecast lowered to 3.5%. Inflation in 2024 remained between 1.5% and 2%, largely driven by rising housing rents, and is expected to stabilize at around 2% in the medium term, according to the IMF.
