Weekly Insights - From Policy to Execution: Signals from Riyadh and Washington

Last week Riyadh hosted major investor gatherings while global monetary policy shifted, producing a dense set of signals for strategists and allocators. Below I pull the threads together into a single narrative, highlight the investment implications, and offer clear takeaways.

The macro backdrop shifted; gently in the United States and emphatically in Saudi Arabia

On October 29, 2025, the US Federal Reserve cut its policy rate by 25bps to a 3.75% - 4.00% range, marking the second reduction this year after September’s move. The decision reflected a softer labour market and a cooling inflation profile, even as Chair Powell stressed that further moves remain conditional on incoming data. Markets currently anticipate another small cut later in the year, though uncertainty persists due to data disruptions from the federal government shutdown that began on October 1, 2025.

The immediate inflation inputs that shaped the Fed’s decision were visible in the September 2025 US CPI report. Core CPI rose 0.2% MoM and 3.0% YoY, a marginal undershoot of expectations and the slowest three-month pace for the core metric. The moderation was led by shelter and services components, though services excluding housing remain relatively sticky.

Saudi Arabia delivered tangible data and deal flow in the same week

Saudi Arabia’s real GDP grew 5.0% YoY in Q3 2025, according to the General Authority for Statistics (GASTAT). The expansion was led by an 8.2% increase in oil activities while non-oil activity rose 4.5%, underscoring both the short-term boost from higher production and the continuing structural progress in non-oil sectors.

At the same time, the Ministry of Finance’s Q3 report recorded a budget deficit of SAR 88.5 billion, the largest in five quarters, driven by a 13% decline in revenues and a 6% rise in expenditures. On a nine-month basis, the deficit stands materially higher than the prior year, and public debt has increased to finance the gap. These fiscal pressures form the backdrop to current policy choices on investment prioritization and private sector participation.

Together, these two facts are critical. The GDP expansion shows that the economy is moving, but the widening fiscal gap reinforces why the state, sovereign investors, and private capital are being encouraged to reallocate, reprioritize, and accelerate deal execution.

FII9 and the Global Health Exhibition crystallised strategy and capital—not just headlines

The Future Investment Initiative (FII9) in Riyadh confirmed a strategic reorientation at the Public Investment Fund (PIF). Governor Yasir Al-Rumayyan outlined a forthcoming 2026–2030 plan centered on six ecosystems: tourism and entertainment, urban development, advanced manufacturing and innovation, industry and logistics, renewables, and a standalone NEOM ecosystem. The message from policymakers was consistent: move from headline megaprojects toward sectoral ecosystems that can deliver sustainable returns.

Parallel to FII, the Global Health Exhibition produced sizable investment commitments. Organizers and officials announced tens of billions of riyals in healthcare agreements focused on hospital infrastructure, life sciences partnerships, and localization of medical manufacturing capacity. These announcements illustrated an execution-driven focus in a priority sector where the Kingdom aims to build domestic capability and attract regional healthcare flows.

The tone at both summits was pragmatic. The emphasis is now on converting MoUs and announcements into financed, governed, and operating projects, and on structuring incentives that crowd in institutional and strategic investors.

Synthesis and investment implications

The week’s combined signals generate a clear narrative that can be summarised in three linked observations:

• Policy and capital are aligning toward execution, not announcements: PIF’s ecosystem framework and the health and energy financings show a bias toward projects that can be financed, built and operated, and that deliver measurable returns.

• Macro conditions have become marginally more supportive for risk assets while remaining uncertain: The Fed’s easing path reduces near-term funding stress, yet its trajectory depends on labour market and inflation data that could reintroduce volatility. For external investors assessing Saudi and regional risk premia, a slightly lower global discount rate is helpful, but execution and policy consistency matter more.

  
  

• Fiscal pressure in the Kingdom increases the strategic value of private capital and partnerships: The widened Q3 deficit highlights why state balance sheet optimization and private sector mobilization are central to delivery. This explains the strong push to attract long-dated institutional capital into energy midstream, power, and healthcare projects.

Sources

• Federal Reserve, FOMC Statement, October 29, 2025.

• Bureau of Labor Statistics, Consumer Price Index Summary, September 2025 (released October 24, 2025).

• Reuters, “Fed cuts rates again, signals data dependence amid government shutdown,” October 29, 2025.

• General Authority for Statistics (GASTAT), Real GDP Q3 2025 Preliminary Estimate, October 30, 2025.

• Saudi Ministry of Finance, Quarterly Budget Performance Report, Q3 2025.

• Reuters, “PIF outlines 2026–2030 strategy focused on six ecosystems,” October 29, 2025.

• Saudi Press Agency (SPA) and Global Health Exhibition 2025 Press Release, October 30, 2025.

• Argaam, “Saudi budget records SAR 88.5 bln Q3 deficit,” October 30, 2025.