Riyadh strives for sustainable growth
25 September 2025
Commentary
John Bambridge
Analysis editor
Saudi Arabia finds itself at a delicate juncture. Regional instability is escalating, from the Israel-Palestine conflict to trouble in the Red Sea and threats closer to home, creating a testing backdrop for Riyadh’s traditionally quiescent foreign policy approach. For years, the kingdom sought to strike a careful balance between its global investment ambitions and its regional role as a stabilising actor, but events are forcing the Saudi government into an ever more precarious balancing act.
For investors, regional geopolitical volatility matters. The kingdom’s sovereign wealth fund, the Public Investment Fund (PIF), has been the standard bearer of Saudi Arabia’s Vision 2030 transformation programme, with the kingdom’s gigaprojects drawing global attention.
Yet as external pressures mount, foreign direct investment fails to scale and domestic fiscal demands tighten, Riyadh is being forced to recalibrate its approach. The PIF is pivoting away from rigid deadlines for its gigaprojects and shifting towards a more pragmatic model focused on liquidity and event-driven infrastructure.
While the country’s economic fundamentals remain intact – with its population growth and rising domestic consumption all supporting strong long-term demand – cashflow, and initiatives capable of sustaining it, are proving key. Events, from Formula One to the Asian Winter Games, are one such focus, as both a catalyst for new development and as a tangible deliverable and showcase of bankability for investors.
But the government is also turning its attention back to nurturing the core drivers of the economy, including the housing market. The recent legislative intervention to introduce mortgage-backed securities into the Saudi market has served the dual purpose of lubricating the real estate sector with fresh liquidity and stimulating the banking sector with stable income. Such legislative initiatives – which drive the kingdom’s broader Vision 2030 ambitions through private sector demand, not public spending – are just as vital to the country’s long-term prosperity as any of its grandiose, capital-intensive show projects.
Riyadh nevertheless continues to spend where spending is necessary, including on critical energy infrastructure, such as the Dorra gas field with Kuwait, to ensure its long-term energy security. The power and water sector is meanwhile seeing a level of spending second only to the building sector, as Riyadh’s sprawling gigaprojects and masterplans also demand comparably commanding utility network developments. Intent on delivering the essential connective tissue of the kingdom’s economic strategy, Saudi Electricity Company and PIF-backed developers are driving both ambitious renewable capacity growth and the modernisation of the transmission grid.
Where Riyadh once was fixated on dazzling the world with visions of futuristic cities, today the underlying focus is on quietly but firmly laying the groundwork for long-term resilience. The gigaprojects have not disappeared, nor will they; but they are no longer the sole narrative. Instead, Riyadh is building a more balanced model – one that acknowledges regional uncertainty, pursues liquidity and places sustainable infrastructure at the heart of its growth story.
MEED’s October 2025 report on Saudi Arabia includes:
> GOVERNMENT: Riyadh confronts rising regional chaos
> ECONOMY: Riyadh looks to adjust investment approach
> BANKING: New funding sources solve Saudi liquidity challenge
> OIL & GAS: Aramco turns attention to strategic projects
> GAS: Saudi Arabia and Kuwait accelerate Dorra gas field development
> POWER: Saudi Arabia accelerates power transformation
> WATER: Transmission projects drive Saudi water sector growth
> CONSTRUCTION: Saudi construction pivots from gigaprojects to events
> TRANSPORT: Infrastructure takes centre stage in Saudi strategy
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