Saudi Arabia's Non-Oil Private Sector PMI and the Strategic Case for Long-Term Exposure to Vision 2030-Linked Sectors

The recent moderation in Saudi Arabia’s non-oil private sector PMI to 56.3 in July 2025—a slight pullback from June’s 57.2—has sparked questions about the resilience of the Kingdom’s economic transformation. However, this dip masks a far more compelling story: a structural shift toward high-growth, Vision 2030-linked sectors that are insulating the economy from cyclical headwinds. For investors, this is not a red flag but a green light to deepen exposure to a nation redefining its economic DNA.

PMI Moderation: A Pause, Not a Pothole

The July PMI reading reflects a slowdown in output and new orders, with new business growth hitting its weakest pace in over three and a half years [1]. Yet, the index remains firmly in expansion territory, and job creation surged to historic levels, driven by rising workloads and backlogs [2]. Input cost pressures, particularly in wages, persist, but firms are passing these costs to consumers, maintaining profit margins [4]. Crucially, business sentiment, while down from a two-year high, still points to optimism about future output growth [1]. This suggests that the non-oil sector is not faltering—it’s recalibrating, with structural tailwinds outweighing short-term volatility.

Vision 2030: The Engine of Resilience

Saudi Arabia’s Vision 2030 is not a vague aspiration but a meticulously engineered roadmap. By 2025, the private sector’s contribution to GDP has already reached 47%, surpassing its 2030 target [2]. The Public Investment Fund (PIF) is turbocharging this transition, with $30 billion allocated to renewables by 2025 and a $6.1 billion green hydrogen plant in NEOM set to produce 600 tonnes of ammonia daily by 2026 [3]. These projects are not just about sustainability—they’re about creating industries that can thrive in a post-oil world.

Tourism, another cornerstone of Vision 2030, is a case study in explosive growth. In Q1 2025 alone, international tourist arrivals surged 102% year-over-year, outpacing global averages [5]. With 362,000 hotel keys projected by 2030 and mega-projects like the Red Sea Global and Diriyah Gate culture district advancing, tourism revenue is on track to hit SAR 143 billion by 2026 [5]. This isn’t just a rebound from pre-pandemic levels—it’s a structural leap.

Structural Tailwinds: Why the PMI Dip Doesn’t Matter

The moderation in PMI growth is a temporary blip against a backdrop of transformative change. For instance:
- Renewable Energy: Saudi Electricity Company (SEC) has connected 9.2 GW of renewable capacity to the grid in H1 2025, with 14 GWh of storage capacity in development [1]. By 2030, 50% of electricity will come from renewables [3].
- Technology: Initiatives like NEOM’s THE LINE—a 170 km linear city powered entirely by renewables—and the Generative AI Accelerator (GAIA) are positioning Saudi Arabia as a tech hub [3].
- Employment: Despite PMI softness, hiring remains robust, with unemployment at 7%—six years ahead of Vision 2030’s target [2].

The IMF’s revised 2025 GDP growth forecast of 3.6% underscores this resilience, crediting non-oil private sector expansion and Vision 2030’s structural reforms [3]. Even as PMI growth moderates, the underlying momentum in these sectors is undeniable.

A Call to Action for Investors

The key takeaway? Saudi Arabia’s non-oil private sector is not a one-trick pony. The PMI dip is a minor detour in a long-term journey toward economic diversification. For investors, this means prioritizing exposure to Vision 2030-linked sectors:
- Renewables: Bet on solar and wind infrastructure, energy storage, and green hydrogen.
- Tourism: Target hospitality, cultural projects, and travel infrastructure.
- Tech: Focus on AI, smart cities, and digital transformation.

Conclusion

Saudi Arabia’s non-oil private sector may be growing at a slightly slower pace, but the quality of that growth is extraordinary. Vision 2030 is not just reducing oil dependence—it’s building an economy that can outperform global peers in resilience and innovation. For investors with a long-term horizon, this is the moment to lean in.

Source:
[1] Saudi Arabia Non-Oil Private Sector PMI, [https://tradingeconomics.com/saudi-arabia/manufacturing-pmi]
[2] Saudi Arabia's Vision 2030 enters final phase with strong [https://www.arabnews.com/node/2598489/amp]
[3] Saudi Vision 2030: High-Growth Investment Opportunities [https://www.lexology.com/library/detail.aspx?g=7370f429-0c53-44ee-aa20-5bee9c9eb8dc]
[4] Saudi Arabia: Concluding Statement of the 2025 Article IV [https://www.imf.org/en/News/Articles/2025/06/25/saudi-arabia-concluding-statement-of-the-2025-article-iv-mission]
[5] Saudi Arabia Tourism Revenue Hits $13.6 Billion in Q1 2025, [https://soulofsaudi.com/saudi-arabia-tourism-revenue-2025/]