RIYADH: Saudi Arabia’s economy is projected to grow by 3.3 percent in 2025 and 4.1 percent in 2026, according to the latest forecasts from the International Monetary Fund.
These projections reflect significant shifts in the global economic landscape, with the ongoing OPEC+ agreement on oil production cuts playing a key role in tempering growth expectations for the Kingdom in the near term.
In its January 2025 World Economic Outlook Update, the IMF outlined the broader economic outlook for the Middle East and Central Asia, where growth is anticipated to rise by 3.6 percent in 2025, followed by a slightly stronger 3.9 percent in 2026.
These figures are notably lower than previous estimates, primarily due to downward revisions in Saudi Arabia’s growth forecast, which had initially projected a 4.6 percent expansion for 2025. As the region's largest economy, Saudi Arabia's performance significantly impacts the overall regional outlook.
In addition to the impact of oil production cuts, the IMF highlighted other challenges influencing the region's economic prospects, including inflationary pressures and ongoing global uncertainties. Despite these challenges, Saudi Arabia’s ambitious diversification initiatives under Vision 2030—which aim to expand non-oil sectors such as tourism, technology, and renewable energy—are expected to support long-term growth.
Global economic outlook
Globally, the IMF projects economic growth to stabilize at 3.3 percent in both 2025 and 2026, signaling a slowdown compared to previous years. Advanced economies are forecast to grow by 1.9 percent in 2025 and 1.8 percent in 2026, facing persistent challenges such as inflation, tightening monetary policies, and geopolitical tensions.
Among these advanced economies, the US is expected to lead with a growth rate of 2.7 percent in 2025, followed by a modest deceleration to 2.1 percent in 2026.
In contrast, emerging markets and developing economies are expected to grow at 4.2 percent in 2025 and 4.3 percent in 2026, buoyed by the strong performances of countries like India and China. India’s growth is forecast to remain robust at 6.5 percent, while China is projected to experience growth of 4.6 percent in 2025 and 4.5 percent in 2026.
Saudi Arabia’s short-term outlook
The reduction in Saudi Arabia’s 2025 growth forecast is largely attributable to the extended OPEC+ agreement, which continues to limit oil production in an effort to stabilize global oil prices. While these production cuts support oil price levels, they simultaneously constrain the Kingdom's oil revenues, a crucial element of its gross domestic product.
Despite the impact on short-term growth, Saudi Arabia is actively pursuing comprehensive economic reforms to reduce its dependency on oil. Initiatives such as the development of megaprojects like NEOM, as well as strategic investments in green energy and infrastructure, are designed to drive diversification and open new avenues for sustainable growth.
Sectoral diversification and Vision 2030
Saudi Arabia’s Vision 2030 initiatives are already showing promising results in diversifying the economy. Non-oil sectors, particularly tourism, have seen notable advancements. Efforts to position Saudi Arabia as a global destination have led to a surge in international visitors, contributing significantly to the Kingdom’s economic development.
Additionally, the financial sector and emerging industries such as technology and renewable energy are increasingly playing a pivotal role in boosting GDP growth. As the largest economy in the Middle East, Saudi Arabia remains a key driver of regional economic stability.
The IMF’s projections for the Middle East and Central Asia highlight that the region’s overall growth is heavily influenced by developments in Saudi Arabia. While other economies, including Egypt and Gulf states, are also undertaking significant reforms, Saudi Arabia continues to serve as the linchpin for regional economic performance.
