Weekly Insights - Momentum in Motion: What Saudi Arabia’s Latest Indicators Tell Investors

Last week reinforced a clear narrative: Saudi Arabia continues to build momentum through strategic infrastructure investments, controlled cost dynamics in construction, and signs of diversification in trade. Logistics expansion and non‑oil export growth appear to be gaining real‑world traction, offering investors a glimpse of what steady transformation might look like beyond the headlines.

Logistics and Infrastructure: DHL Commits EUR 130 Million to Riyadh Hub

DHL announced a EUR 130mn investment for a new logistics hub in Riyadh, located within the city’s special integrated logistics zone next to King Khalid International Airport. The 78k sqm facility will open in 2027, with construction beginning next year.

This forms part of DHL’s broader EUR 500mn Middle East investment plan spanning 2024 to 2030 with a strategic focus on Saudi Arabia and the UAE. The new facility is expected to strengthen industrial distribution, enhance the competitiveness of Riyadh as a manufacturing base, and support substantial trade flows that are increasingly routed through the Kingdom.

Construction and Energy Costs: The CCI Rises 1% YoY

The latest release from General Authority for Statistics (GASTAT) shows that the Saudi Construction Cost Index (CCI) rose by 1.0% in October 2025 compared with October 2024. The residential‑sector index rose 1.0%, while non‑residential costs rose 0.9%. Month‑on‑month (October vs September 2025), the CCI remained stable.

This modest increase suggests that while demand for construction is ongoing, cost pressures remain manageable. The rise does not appear to reflect a widespread materials shortage but seems driven in part by labour, equipment rental, and services input costs. For investors and developers, this signals a stable construction‑cost environment, helpful for underwriting real‑estate, infrastructure, and industrial projects with predictable cost bases.

Trade and Non‑Oil Export Momentum: Early Signals of Diversification

Data for September 2025 from GASTAT, as reported by media, shows the Kingdom achieved a merchandise trade surplus of SAR 26.0 billion, marking the largest surplus in 16 months. This was driven by a 21.7% year‑on‑year increase in non‑oil exports (including re‑exports), even as oil exports also rose. The ratio of non‑oil exports (including re‑exports) to imports increased to 42.5% in September 2025, up from 35.9% a year earlier. Among non‑oil exports, machinery, electrical equipment and parts were cited among the fastest‑growing categories.

These figures reinforce that diversification is more than a policy aspiration, whereby the non‑oil trade component is showing real‑time strength. While this is just one month of data, the size of the surplus and non‑oil export growth provide tangible evidence that non‑oil sectors and reexport activity are gaining traction.

GDP Outlook Softens Slightly as OPEC+ Maintains its Production Pause

The latest ICAEW and Oxford Economics forecast shows that Saudi GDP growth is expected to reach 4.5% this year and 4.3% in 2026. The slight easing in next year’s growth reflects the OPEC+ decision to hold production increases in the first quarter of 2026. The pause may extend into the second quarter depending on market conditions.

Non-oil GDP growth is expected to strengthen to 5% in 2026 and 5.3% in 2027 supported by industrial policy, export growth in machinery and electrical goods, rising logistics throughput, and ongoing investment in manufacturing. Oil sector growth should remain around 4.5% next year before moderating slightly in 2027.

Fiscal dynamics will be influenced by the production pause and subdued prices next year. Oxford Economics expects the budget deficit to widen to 5.6% of GDP in 2026. Inflation is projected to remain modest at 2.2% next year and 2.7% in 2026.

Oil Market Outlook Turns Cautious as Analysts Warn of Potential Downside

JPMorgan has warned that global markets may face significant oversupply over the next several years as non-OPEC production growth outpaces demand. Brent crude could average USD 57 per barrel in 2027. A more bearish scenario could push prices into the thirties. OPEC+ will likely shoulder the majority of the adjustment burden to rebalance the market.

For Saudi Arabia, lower prices pose fiscal challenges, and could reinforce the need for asset monetization, disciplined capex planning, and continued economic diversification.

Closing Note

Saudi Arabia’s economic narrative is defined by a powerful combination of resilient non-oil activity, and long-term investment commitments. At the same time, the global oil market faces headwinds from oversupply while OPEC+ adopts a cautious stance. This creates a mixed but manageable macro backdrop for the Kingdom.

Although growth may soften slightly in 2026 due to the pause in oil production, the medium-term trajectory remains firmly positive with manufacturing, logistics, and non-oil sectors leading the way.

Sources

• DHL announced a EUR 130mn investment for a new logistics hub in Riyadh: DHL Supply Chain press release

• Construction Cost Index records annual increase of 1% in October 2025: GASTAT / Saudi Gazette

• Saudi trade surplus climbs 16‑month high to SAR 26 billion in September 2025: GASTAT / Arab News / Saudi Gazette

• Q4 2025: The ICAEW Economic Update Middle East

• JPMorgan forecasts Brent crude to be $57 per barrel: Energy New