Saudi Arabia's FDI Surges 24% in Q1 2025, Attracting Global Capital

Saudi Arabia's foreign direct investment (FDI) inflows for the first quarter of 2025 reached 240 billion riyals, approximately 64 billion dollars, marking a 24% year-on-year increase. This surge represents the strongest start to a year since 2022, underscoring the kingdom's successful policies in attracting overseas capital. The significant growth in FDI highlights Saudi Arabia's strategic efforts to diversify its economy and reduce its reliance on oil revenues. The country has been actively pursuing initiatives to enhance its business environment, improve infrastructure, and foster innovation, all of which have contributed to this robust investment inflow. The increase in FDI is a testament to the confidence that international investors have in Saudi Arabia's economic prospects and its commitment to long-term growth. This trend is expected to continue as the kingdom implements further reforms and attracts more foreign capital, positioning itself as a key player in the global economy.

According to data from the Saudi General Authority for Statistics, the total FDI inflow for the first quarter was 240 billion riyals. During the same period, foreign capital outflows amounted to 18 billion riyals, approximately 4.8 billion dollars, marking a 54% year-on-year decrease. The net FDI for the quarter stood at 222 billion riyals, approximately 59 billion dollars, reflecting a 44% year-on-year increase but a 7% quarter-on-quarter decline. Net FDI, which accounts for retained investments after deducting profit repatriations and loan repayments, is a crucial indicator of a country's long-term foreign investment confidence.

Attracting foreign investment is a key component of Saudi Arabia's "Vision 2030" strategy, aimed at diversifying the economy. In April, Saudi Arabia ranked 13th in the 2025 Foreign Direct Investment Confidence Index, its highest position to date. Despite global investment pressures, Saudi Arabia continues to actively seek international capital. Foreign companies establishing regional headquarters in the kingdom are eligible for various incentives, including a 30-year exemption from corporate income tax.

These incentives have encouraged numerous multinational corporations to expand their presence in Saudi Arabia. Tech giants such as Microsoft, Google, and Oracle, along with international financial institutions like BlackRock, Morgan Stanley, and Citigroup, have received approval to set up regional headquarters in the country. In the first quarter of 2025, PepsiCo opened a new regional headquarters in the King Abdullah Financial District in Riyadh. These developments underscore the growing appeal of Saudi Arabia as a strategic investment destination.

Additionally, data from the Saudi General Authority for Statistics indicates that the unemployment rate in Saudi Arabia dropped to a historic low of 6.3% in the first quarter of 2025. The International Monetary Fund (IMF) has also revised its economic growth forecast for Saudi Arabia, increasing it from 3% to 3.5% for the year. These positive economic indicators further bolster the kingdom's attractiveness to foreign investors, reinforcing its position as a dynamic and forward-looking economy.