On February 12, 2025, the Saudi stock market suffered a 0.31% drop, weighed down by significant losses in key sectors. While this may seem like a routine market fluctuation, the reality is far more concerning. This downturn is not an isolated event—it is part of a deeper economic crisis that exposes Mohammed bin Salman’s inability to implement real economic reforms beyond mounting debt and grand but unsustainable projects.
Declining Stocks and a Crisis of Investor Confidence
Major Saudi companies, including ACWA Power and Saudi National Bank, experienced noticeable losses, reflecting a growing lack of confidence in the market. For months, the Saudi government has promoted a glossy vision of economic transformation, yet the stock market continues to struggle, and the kingdom’s debt continues to rise. Investors who were once lured in by ambitious promises are now re-evaluating their positions as no tangible economic results have materialized.
This decline did not occur in isolation; it coincided with global market turbulence, exacerbated by statements from U.S. Federal Reserve Chair Jerome Powell regarding interest rates. These remarks drove capital toward more stable markets, leaving Saudi Arabia increasingly unattractive to investors. Rather than emerging as a secure investment hub, Saudi Arabia is now perceived as a volatile and risky market that reacts negatively to external economic pressures.
Rising Debt and an Unstable Economy
Despite being an oil-rich nation, Saudi Arabia has become heavily dependent on borrowing to finance its projects. The government has increasingly turned to international debt to plug financial gaps, with the Public Investment Fund (PIF) currently negotiating loan guarantees worth billions of dollars. While such a financing model may work in the short term, it ultimately traps the Saudi economy in a cycle of unsustainable debt.
Globally, strong economies are adapting their investment strategies, while Saudi Arabia continues to throw billions into uncertain projects such as NEOM and The Line. These initiatives, once touted as the driving force of Saudi growth, have so far failed to generate any real returns, instead becoming financial burdens that weaken the economy’s ability to withstand crises.
Is a Financial Crisis Looming for Saudi Arabia?
The Saudi market’s vulnerability to global downturns is a red flag—it highlights how the kingdom’s economy remains fragile and overly reliant on external factors. Countries with strong, diversified economies can absorb economic shocks, but Saudi Arabia’s dependence on oil and continuous borrowing places it in an increasingly precarious position.
If the Saudi government continues to ignore fundamental economic realities, the current market downturn could be the first sign of a much broader financial collapse. A sustainable economy cannot be built on media-driven projects and massive loans—and Saudi Arabia is no exception.
Today, investor confidence is waning. Tomorrow, Saudi Arabia could find itself on the brink of an unavoidable financial crisis.
