The most informative sovereign ratings are the ones issued in difficult years. S&P Global Ratings has affirmed Saudi Arabia’s long-term credit rating at A+ with a stable outlook, repeating the assessment it made in March, while forecasting a 0.9 percent contraction in real output this year, an 8.2 percent rebound in 2027 and growth averaging 3.3 percent across the two years after that. An agency that expects a contraction and holds the rating anyway is making a judgment about what sits beneath the headline number.
The shape of the forecast explains the judgment. The decline is concentrated in oil volumes: the statistics authority’s second-quarter accounts showed oil activities down 24.8 percent year on year while non-oil activity grew 0.9 percent. A contraction produced by production decisions behaves differently from one produced by weak demand, and the 8.2 percent rebound S&P pencils in for 2027 is the same cycle read forward, output returning as barrels do. The domestic economy runs on the steadier line underneath, and that line has stayed positive through the whole episode.
The structural figure in the agency’s reasoning is the one worth keeping. Non-oil sectors now account for roughly 70 percent of gross domestic product on S&P’s measure, up from 65 percent in 2018. Five points of share in eight years is slow arithmetic, but it compounds: every point shifted moves fiscal revenue, employment and credit demand onto ground that crude prices do not move. The agency also noted foreign exchange reserves at their highest level since early 2020, alongside a substantial net asset position for the government. Together those are the buffer the stable outlook rests on.
The other half of the rationale is flexibility. S&P cited the Kingdom’s diversified energy export infrastructure and its storage and refining capacity as insulation against regional pressures, and, on the fiscal side, the government’s demonstrated ability to reprioritize Vision 2030 investment without destabilizing public finances. The second point deserves attention, because re-sequencing capital programs is often read from outside as retreat. Ratings analysts read it the other way: a sovereign that can slow one program to protect its balance sheet is exercising exactly the discipline a rating exists to measure.
The practical value of an affirmation is priced in basis points. The sovereign has been a steady issuer this year, including a $3.25 billion dual-tranche dollar sukuk this month that drew reported orders of $16.5 billion, and the domestic sukuk program runs monthly. A+ with a stable outlook keeps that funding at investment-grade cost while the deficit is financed by choice rather than necessity. For the banks and corporates that price off the sovereign curve, from tier 1 capital to project debt, the affirmation holds their benchmark still.
The calendar ahead will test the forecast more than the rating. The pre-budget statement due this autumn will show how the government plans 2027 spending against the rebound S&P expects, the third-quarter flash estimate arrives in late October, and the other major agencies will publish their own reviews in the months ahead. The number to watch through all of it is the non-oil growth line: the rating’s foundation, and the one figure production policy cannot move in either direction.