S&P Global Ratings: Saudi Arabia ‘A/A-1’ Ratings Affirmed; Outlook Stable

On Sept. 15, 2023, S&P Global Ratings affirmed its ‘A/A-1’ foreign and local-currency unsolicited sovereign credit ratings on Saudi Arabia. The outlook is stable. At the same time, we maintained our ‘A+’ transfer and convertibility (T&C) assessment on the sovereign.

The stable outlook balances the expectation that the government’s reform agenda will continue to underpin the development of the non-oil sector and support non-oil growth and fiscal receipts against the cyclicality of a still hydrocarbon-focused economy, with fiscal and societal pressures tied to a growing population.

The ratings are underpinned by Saudi Arabia’s sustained reform momentum in recent years. Reforms have included measures to foster non-oil economic growth.

After very strong real GDP growth of 8.7% in 2022 (the fastest among G20 countries), Saudi Arabia’s growth will slow to 0.2% in 2023. This comes after global economic conditions, including a subdued rebound in China, led to global oil demand weakening in late 2022 and early 2023, prompting OPEC+ (with Saudi Arabia at the forefront) to cut oil production levels, and resulting in a contraction in the Saudi oil sector.

From 2024 onward, S&P Global Ratings expects higher global oil demand to lead to an increase in Saudi production levels, and this, alongside non-oil growth, will see GDP growth rebound and average 3.4% in 2024-2026.