Saving and Investment (1)

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Saving has a dual importance: it is a shield for the family against income fluctuations, and at the same time, it is the main source of financing for investment when tax revenues are insufficient to cover capital expenditures.

Compared to the G20 group, Saudi Arabia is not considered a low-saving country; its total savings reached 31.9% of GDP in 2023, compared to the group's average of 25.7% in the same year according to World Bank data, ranking fifth among the group's members. The rate then declined to about 30.4% in 2024 and 28.9% in 2025, which is below Saudi Arabia's historical average (about 34% since 1971). However, the share of households in net savings did not exceed 22.9% in 2024 according to the General Authority for Statistics, which keeps the need for household savings ongoing.

In this context, one of the most famous sayings about saving, which completely contradicts the saying 'Spend what is in your pocket, and what is in the unseen will come to you,' and surpasses the common saying 'Stretch your legs according to your blanket,' is the saying by investor Warren Buffett: 'Do not save what is left after spending, but spend what is left after saving,' or more succinctly: 'Save then consume.'

In practice, perspectives on household saving vary, and thus saving behavior differs, and perhaps the three sayings encapsulate three schools of thought that people follow consciously or unconsciously. The bias here, without ambiguity, is towards the third saying; as it is possible to save even a little, but if income is insufficient for both saving and consumption, the family's financial independence becomes threatened, and this threat must be confronted with positive action, not postponed.

In general, economies rely on household savings to finance capital investments, as the treasury's revenue from taxes and fees is mostly directed towards covering government operating expenses. Therefore, saving in those economies is of critical importance: if it decreases, the capacity of the economy and its infrastructure are affected, and vice versa. The situation differs in economies that depend on public finances from the proceeds of selling natural resources. In the Kingdom, the need for household savings remains, but it is usually lighter, as part of the investment spending is financed by public treasury funds, most of which come from oil revenues.

However, the government's share of capital expenditure (gross fixed capital formation) has been gradually decreasing in favor of non-government spending. According to the monthly bulletin from the Ministry of Investment, the total gross fixed capital formation in the first quarter of 2026 reached approximately 358.2 billion riyals, an increase of 5.1% year-on-year. The non-government sector contributed 319.9 billion riyals (about 89%) with a growth of 1.3%, compared to 38.3 billion for the government sector with a growth of 54%. This momentum continued in the first half of the year, as the total gross fixed capital formation rose by 5.2% year-on-year, and grew by 5.3% in the second quarter, with the non-oil private sector's gross fixed capital formation growing by 6.1% in the same quarter. This shift enhances the importance of household savings and private investment in financing capital formation, even in an economy that relies on part of its investment spending on oil revenues. Following.

Founder of the Jawatha Consulting Center