Imagine a vibrant city, massive projects being built on every corner, and ambitious plans drawn for the coming years. At the heart of this movement, Saudi Arabia is steadily advancing towards a less oil-dependent and more diversified economy.

Moody’s agency sees a bright path ahead for the Kingdom, with an expected annual growth of the non-oil sector between 4.5% and 5.5% over the next decade, though challenges remain, from credit expansion to growth in the insurance sector.

According to “Al-Eqtisadiah” quoting Moody’s, the services sector will remain the main growth driver, especially with the implementation and gradual marketing of major projects, which supports Saudi Arabia’s efforts to achieve Vision 2030 to diversify the economy. Government support for public-private partnerships helps maintain the credit quality of companies despite rising expenses and debt levels.

As for Saudi banks, since 2021 credit growth has exceeded deposit growth, driven by demand for major projects and mortgages. To address this, banks are diversifying funding sources to include issuing financial instruments, syndicated loans, and the expanding mortgage market developed by the Saudi Real Estate Refinance Company, to ensure continued credit quality.

Regarding the insurance sector, it is witnessing rapid expansion with increased product diversity and growing demand, which raises risks for smaller, less diversified companies, as they find it difficult to cope with rising claims and reinsurance costs. Nevertheless, improved regulation and mergers and acquisitions support market stability and enhance companies’ ability to face challenges.

In summary, Saudi Arabia is steadily moving towards a diversified and sustainable economy, benefiting from major projects and strategic partnerships, while maintaining credit quality in banks and insurance companies amid continuous expansion in the non-oil sector.