RIYADH: Saudi Arabia’s gross domestic product growth is projected to pick up to 4.5 percent in 2027, according to an industry report.
A Middle East economic update from the Institute of Chartered Accountants in England and Wales projected a moderation in Saudi economic growth, from 4.5 percent in 2025 to 4.3 percent in 2026.
The non-oil sector shows robust strength, with the Purchasing Managers’ Index soaring to 60.2 in October, its second-highest level since 2014, reflecting strong gains in output, new orders, and employment.
“We expect non-oil activity to expand by 5 percent in 2026, from 4.6 percent this year, and accelerate to 5.3 percent year-on-year in 2027,” the ICAEW added.
However, the institute noted that the fiscal deficit widened sharply to SR88.5 billion ($23.5 billion) in the third quarter of 2025, and the full-year deficit forecast for 2025 has been raised to 5.3 percent of GDP, with an expected widening to 5.6 percent in 2026.
“Despite rising fiscal pressures, we don’t anticipate a significant pullback in government spending, as the authorities retain ample buffers to manage near-term financing needs.”
Recent reforms aimed at opening the economy include easing restrictions on foreign investment in real estate and the local equity market, and a five-year rent freeze in Riyadh aimed at curbing rental inflation, though this may deter private investment in new rental developments. Inflation is expected to remain contained at 2.2 percent in 2025.
In the UAE, GDP growth is expected to pick up to 5.6 percent in 2026, from an estimated 4.9 percent this year, driven by strong non-oil growth in tourism, trade, and financial services, alongside a rebound in oil output as OPEC+ quotas ease in the second half of 2026.
Non-oil activity remains robust, with PMIs hovering around 54, and non-oil GDP is forecast to expand by 4.3 percent in 2026, supported by “sustained trade activity, robust consumption, rapid population growth and continued policy-driven diversification.”
The UAE’s 2026 federal budget showed a huge 29 percent increase in forecast government revenue and spending. “We expect a similar picture for the general budget as the government aims to make strides in achieving the long-term targets in its ‘We the UAE 2031’ development plan.”
Dubai’s economy grew by 4.4 percent year on year in the first half of 2025, underscored by a 6.9 percent fiscal surplus.
The UAE’s current account balance has improved significantly, and the implementation of a domestic minimum top-up tax aligns with international standards. Inflation is expected to average 1.9 percent this year before rising to 2.5 percent in 2026.
Across the GCC, regional GDP is forecast to grow by 4.4 percent in 2026. The GCC non-energy sector is expected to expand by 4.1 percent in 2026.
GCC consumers remain standout performers, with consumer spending projected to grow by an average of 3.5 percent annually over the next two years.
The travel and tourism sector continues to grow, with the upcoming GCC unified visa in 2026 expected to further boost arrivals. Beyond tourism, technology is emerging as a key driver of diversification, with significant investments in artificial intelligence infrastructure.
