Saudi Arabia construction and manufacturing sectors drive economic growth

Saudi Arabia’s non-oil private sector is showing resilience, with the Operating Revenues Index rising 3 percent year-on-year in August. This growth is primarily driven by a 7.7 percent increase in manufacturing activities and a 3.2 percent rise in the construction sector.

According to JLL, the construction market is transitioning from a period of hyper-growth toward a more mature and sustainable phase through 2026 and 2027. This shift is supported by policy changes such as Riyadh’s revised White Land Tax, which incentivizes the development of unutilized land. However, the sector faces supply chain headwinds due to regional geopolitical tensions, which have increased the cost of imported materials like steel, aluminum, and cement, and extended delivery timelines.

The Riyad Bank Purchasing Managers’ Index rose to 55.3 in September, signaling the strongest improvement in non-oil private-sector business conditions since February. These developments reflect ongoing efforts to diversify the Kingdom’s economy and reduce reliance on crude oil revenues.