Moody's Upgrades Saudi Arabia's Credit Rating To Aa3 With Stable Outlook Amid Economic Diversification

Moody’s has reaffirmed Saudi Arabia's credit rating at "Aa3" with a "stable" outlook. The agency emphasised the Kingdom's strong economic foundation, bolstered by its vast hydrocarbon resources and improving institutional effectiveness. A robust government balance sheet further supports this positive assessment.

The Kingdom's economy is expected to remain resilient despite potential challenges from fluctuating oil prices. Moody’s anticipates that ongoing economic and fiscal diversification efforts will gradually reduce Saudi Arabia's dependency on hydrocarbons. This shift aims to lessen the impact of changes in the oil market over time.

Saudi Arabia's economic momentum is projected to stay solid, with non-hydrocarbon activities continuing to thrive. Moody’s forecasts real GDP growth to reach approximately 4.1% in 2025, increasing to 4.5% in 2026. Large-scale projects and strong private consumption are key drivers of this growth.

The non-oil sector has shown resilience, maintaining its diversification momentum even amid lower oil prices in 2025. In the first half of the year, it grew by an average of 4.5% year-on-year. This growth was driven by sectors such as tourism, wholesale and retail trade, restaurants and hotels, alongside mining and manufacturing.

The expansion of Saudi Arabia's non-hydrocarbon sector is supported by domestic demand and ongoing large-scale projects. Record low unemployment rates also contribute to this robust performance, enhancing private consumption and supporting diverse economic activities.

Moody’s highlights that despite cyclical declines in oil prices, Saudi Arabia's commitment to diversification remains steadfast. The Kingdom continues to focus on reducing its reliance on hydrocarbons while fostering growth in other sectors.

This strategic approach aims to ensure long-term economic stability and resilience against external market fluctuations. By prioritising diversification, Saudi Arabia seeks to create a more balanced and sustainable economic future.

With inputs from SPA