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).
