Saudi Arabia shifts from economic cycle: Al-Jadaan

Saudi Finance Minister Mohammed Al-Jadaan said the Kingdom spent four decades facing fiscal-policy challenges, mainly because government spending rose and fell with the economic cycle, tracking oil prices and activity, which caused unwanted volatility.

At a panel on sustainable development in the 2026 budget, he noted that the past eight years focused on decoupling spending from the cycle, ensuring it no longer reacts automatically to domestic or global growth swings.

He explained that when growth slows, domestically or abroad, spending is increased to stimulate the economy, while faster growth and rising inflation prompt a slight reduction in spending to control price pressures.

From 2016 to 2024, the oil sector’s growth averaged -0.5%, yet the Kingdom achieved 5% annual growth in non-oil activity, thanks to the new fiscal approach, a result that would not have been possible under the previous cycle-linked policies.

Al-Jadaan added that this success comes from directing spending toward sectors with direct economic impact and essential services for citizens, boosting consumption and investment, and that this approach will continue over the next three years.