Saudi Arabia’s 2025 budget brings 5% increase to military spending as local industry hits 20%: What we know
Introduction
Saudi Arabia’s recently approved 2025 budget and its progress in localizing defense production reveal significant developments in the Kingdom’s military and economic strategies:
2025 Budget Allocation for Military
The military sector received the largest allocation in the 2025 budget at SR272 billion ($72.5 billion).
This represents a 5% increase compared to the 2024 estimates.
Progress in Local Defense Production
Saudi Arabia has made substantial strides in localizing its defense industry, reaching nearly 20% localization by the end of 2023.
This is a significant increase from just 4% in 2018.
Key Developments in Defense Industry
The number of authorized and licensed facilities in the military industries sector has grown from 5 in 2019 to 296 by the third quarter of 2024.
GAMI (General Authority for Military Industries) has signed over 53 industrial cooperation programs worth approximately 35 billion riyals ($9.32 billion).
These programs include purchase orders for local companies worth about 13 billion riyals ($3.46 billion).
Vision 2030 Goals
Saudi Arabia aims to localize 50% of its defense production by 2030.
Despite the current 20% localization rate, Saudi officials remain confident in achieving this ambitious target.
Economic Outlook
Saudi Arabia’s Real GDP growth is forecasted at 4.6% in 2025, up from the 0.8% estimate for 2024.
This growth is expected to be driven by a rise in non-oil sector activities.
Strategic Initiatives
GAMI has launched an “Invest in Saudi Arabia” section on its website to attract international firms.
The authority has identified over 70 opportunities in the supply chain, worth up to $64 billion over the next decade.
Conclusion
These developments highlight Saudi Arabia’s commitment to both strengthening its military capabilities and diversifying its economy through local defense production, aligning with the broader goals of Vision 2030.
