Arab News | Saudi business confidence rises to 56.7 as industry, services optimism strengthens

RIYADH: Saudi Arabia’s Business Confidence Index rose to 56.7 in August, up from 56.5 in July, driven by continued optimism in the Kingdom’s non-oil economy, official data showed. 

The index held firmly above the 50-point neutral threshold, underscoring that companies remain optimistic about economic conditions and expect continued growth across various sectors, according to the General Authority for Statistics. 

The sustained momentum in the BCI comes as Saudi Arabia presses ahead with its Vision 2030 agenda, which seeks to diversify the economy and reduce reliance on crude revenues. 

The reading also highlights the resilience of Saudi Arabia’s non-oil economy even as businesses in the Middle East region continue to be affected by the impacts of the US-Iran war.

The index dropped to 52.1 in March amid heightened regional geopolitical tensions before rebounding to 54.5 in April and strengthening further, reaching 56.5 in July.  

In its latest report, GASTAT stated: “The index reflects prevailing optimism in the business sector, supported by establishments’ confidence in the stability of economic activity and continued growth across various sectors.”  

Commenting on the figures, Hamza Dweik, head of trading for the Middle East and North Africa at Saxo Bank, said that the underlying picture of Saudi Arabia’s business landscape is particularly encouraging because confidence is being supported by both public and private sector momentum.  

“While the month-on-month increase of 0.2 points is relatively small, the fact that confidence has continued to recover from its March low suggests businesses are looking beyond short-term global uncertainties and focusing on domestic growth opportunities,” said Dweik, adding that this resilience is notable given a challenging external environment marked by higher global interest rates, trade uncertainty, and geopolitical risks.

He continued: “The data suggests that companies operating in Saudi Arabia still see strong demand conditions and remain willing to invest, expand, and hire.” 

Thomas Kuruvilla, managing partner of Arthur D. Little Middle East and India, said the data suggested confidence was increasingly being supported by economic activity rather than sentiment alone. 

“While the increase itself is modest, the more important signal is the resilience it reflects as the Kingdom enters a more commercially demanding phase of Vision 2030,” said Kuruvilla. 

Industry and services gain 

The industrial sector posted the biggest improvement among the three major sectors tracked by GASTAT. Its confidence index climbed to 55.8 in August from 54.7 a month earlier, supported by stronger expectations for overall performance and employment. 

The services-sector index rose to 56.1 points, up 0.9 points from 55.3 in July. The increase was supported by greater optimism among establishments, especially in fixed investment expenditure and overall performance.  

Construction remained the most optimistic of the three sectors, despite a slight decline. Its index slipped to 57.3 from 57.7 in July as confidence weakened around current and expected input costs.  

“Recent data shows that business confidence has been broadly based across industries, with construction remaining one of the strongest-performing sectors with a BCI of 57.3, supported by ongoing giga-project spending and strong order pipelines,” said Dweik. 

Non-oil backdrop 

The confidence data adds to signs of continued activity in Saudi Arabia’s non-oil economy, even as lower oil-sector output weighs on headline growth. 

Saudi non-oil activities expanded 0.9 percent from a year earlier in the second quarter of 2026, while real gross domestic product contracted 4.7 percent, according to GASTAT data reported earlier this month. 

Vijay Valecha, chief investment officer at Century Financial, said that the recent uptick in Saudi Arabia’s BCI amid the conflict shows the resilience of the Kingdom’s economy, which help the index recover quickly after the dip witnessed in March. 

“The economy showed strong resilience after the geopolitical shock. It recovered quickly and continued to grow. This suggests that the non-oil economy is supported by real strength, not just short-term optimism,” said Valecha. 

He added: “Although the rise was small, the index remained well above the 50-point level, which shows that businesses are still confident about the economy. This confidence is important because oil markets continue to face uncertainty.” 

Kuruvilla said Saudi Arabia’s economic transformation was also helping strengthen its appeal to domestic and international investors. 

“For international investors and Saudi family conglomerates alike, the message is becoming clearer: public investment has created the platform, but the next phase of opportunity lies in building, partnering and scaling alongside it,” he said.

Saudi Arabia is increasingly demonstrating its ability to attract global capital while recalibrating its investment program with greater commercial discipline, Kuruvilla added. 

Dweik said the latest confidence reading was consistent with other indicators pointing to continued expansion in non-oil activities and a gradual diversification of the Saudi economy. 

“If confidence levels are sustained over the coming months, they should support further private sector investment and economic growth into 2027,” he said. 

The BCI is an economic indicator that reflects the level of optimism among establishments regarding current business conditions and future expectations, based on a survey of a sample of establishments operating across non-oil economic activities classified according to the International Standard Industrial Classification of All Economic Activities, or ISIC4.