What firm-level data reveals about Saudi Arabia’s private-sector growth?

Big economic transformations are often easiest to see from the outside: new skylines, new industries, rising investment and strong headline growth. The harder question is what is happening inside the firms driving that growth. Are businesses becoming more productive? Are small firms able to invest and grow? Are companies innovating, exporting and creating jobs that can last? That question matters especially for Saudi Arabia. Nearly a decade into Vision 2030, the country has made visible progress in tourism, entertainment, housing, manufacturing and digital services. Yet the Vision itself has always been about more than large projects. It places the private sector at the center of diversification and describes it as a permanent strategic partner in the country’s transformation. The success of the next phase will therefore depend on whether private firms can turn today’s momentum into sustained productivity growth and stronger participation in non-oil markets. The recently released 2025 edition of the World Bank Enterprise Survey for Saudi Arabia sheds light on what is happening inside firms. At first glance, there are several encouraging results for the private sector (Figure 1). Employment growth remained broadly stable, while sales growth increased to 6 percent. Labor productivity growth recovered from –10.3 percent in 2022 to broadly flat growth of 0.1 percent in 2025, although it remains below the 2.8 percent average observed in high-income economies. These gains are of course encouraging, but they tell only part of the story. At a macro level, Saudi Arabia’s growth continues to rely heavily on capital, while Total Factor Productivity has been declining (Figure 2, Panel A). Diversification has also moved only gradually: the non-oil share of GDP has barely shifted in recent years, and non-oil exports still account for a relatively small share of the economy (Figure 2, Panel B). The weakness is not evenly distributed. Manufacturing firms recorded labor-productivity growth of around 3 percent, while growth in services was close to zero. Large firms also performed better than small firms. Regionally, the Western and Central regions recorded positive growth, while firms in the Southern, Northwestern, Eastern and Northern regions experienced declines. The Southern region showed the largest fall. This matters because a broad-based transformation requires more than a few successful sectors, large firms or locations. The Enterprise Survey helps connect these outcomes to the constraints firms face. Removing these constraints provides one potential pathway to unleash the Saudi growth potential. Finance stands out immediately. More than half of firms identify access to finance as their biggest business obstacle, while about 48 percent are fully credit constrained. At the same time, investment remains relatively low. The share of firms buying fixed assets increased from 16.3 percent in 2022 to 22.4 percent in 2025, but it is still below the GCC average of 32.5 percent and the high-income benchmark of 48 percent. This is an important link. Limited access to finance can make it harder for firms to purchase equipment, adopt new technology, expand production, or enter new markets. The problem is therefore not simply that investment is low and finance is constrained; the two are part of the same story. The survey results suggest that financing constraints are not confined to young firms, but are felt across firms of different ages, while smaller firms appear particularly exposed. In an economy with substantial financial resources and a growing fintech sector, the key issue is therefore whether financing reaches firms in forms that match their investment and growth needs. The same connection appears in innovation. Only 11.2 percent of Saudi firms introduced a new product, and 4 percent introduced a new process. Both rates are below the averages for other GCC countries and well below high-income economies. Innovation does not always mean a major scientific breakthrough. For many firms, it means upgrading equipment, improving a product, reorganizing production or using digital tools more effectively. These patterns are likely connected: innovation often requires investment, skills, and a willingness to take risks. Exports reveal another part of the same story. Only 4 percent of manufacturing firms and 0.8 percent of services firms export directly. Among large firms, the share is 7.4 percent; among small firms, it is almost zero. By contrast, around 18 percent of manufacturing and services firms import inputs. Saudi businesses are therefore more connected to global markets as buyers than as sellers. Finance is one barrier to exporting, because entering foreign markets often requires upfront spending on certification, product adaptation, marketing and logistics. But trade-related regulations also matter. Customs and trade regulations are the second most frequently cited major constraint in the survey, reported by 10.5 percent of firms (Figure 4). This helps explain why low exports should not be viewed as an isolated outcome. Limited access to finance constrains investment and innovation, while customs and trade frictions make it harder for firms that do invest to reach foreign customers. Together, these obstacles weaken the path from domestic growth to international competitiveness. The 2025 data suggest that the next phase of growth and diversification is increasingly about enabling more firms to take advantage of existing opportunities. The priorities are closely connected: improving access to finance so viable firms can invest; strengthening firms’ ability to innovate and build skills; reducing practical barriers to exporting; and paying closer attention to smaller firms, services, and regions where productivity growth remains weakest. Vision 2030 has created strong momentum and opened new opportunities across the economy. The question now is how to turn that momentum into growth that can increasingly sustain itself; growth driven not only by public investment, but by firms that become more productive, innovate, compete, and expand into new markets. In the end, the transformation will depend as much on what Saudi firms do with these opportunities as on the investments that created them.