RIYADH: The International Monetary Fund has raised Saudi Arabia’s economic growth forecast for 2027 to 5.5 percent, up from the 4.5 percent it projected in April, as the Kingdom is expected to be less affected by regional disruptions due to its diversified export routes.
The revised forecast, published in the IMF’s July 2026 World Economic Outlook Update, point to a temporary slowdown in Saudi Arabia’s economy this year before a stronger rebound in 2027.
The fund lowered its 2026 growth forecast to 1.7 percent from the 3.1 percent projected in April, citing updated assumptions related to the conflict in the Middle East and disruptions to trade routes.
The forecast comes a month after the Organization for Economic Co-operation and Development projected the Kingdom’s economy to expand 4.3 percent in 2027, supported by a resilient non-oil sector and robust domestic demand.
The IMF’s latest report forecast that growth across the Middle East and Central Asia is projected to slow to 0.7 percent in 2026 before rebounding to 6.5 percent in 2027, a sharp shift from April’s figures of 1.9 percent and 4.6 percent, respectively.
“The global economy as a whole has, so far, weathered the shock from the war better than feared,” the IMF said in the report.
Aseel Al-Aranki, research and analysis department manager at River Prime, told Arab News the IMF’s update shows a two-speed outlook for the Kingdom.
“The picture shifts dramatically when looking ahead to 2027, with the IMF raising its growth forecast for Saudi Arabia to 5.5 percent, a full percentage point above its April estimate,” she said.
Al-Aranki said the upward revision is consistent with the IMF’s assumption that the Strait of Hormuz will begin reopening in mid-July, with conditions gradually returning to their prewar state by March 2027.
“Saudi Arabia has been able to absorb much of the shock thanks to its more diversified export routes, which explains the relatively contained near-term slowdown paired with a strong rebound the following year,” she added.
The latest projections build on the IMF’s June assessment that Saudi Arabia’s economy remained resilient despite regional conflict. Following a staff visit to the Kingdom, the fund cited strong fundamentals, low government debt, ample foreign reserves and a large sovereign wealth fund as buffers against external shocks.
Globally, the IMF forecasts growth of 3 percent in 2026 and 3.4 percent in 2027, broadly unchanged on a cumulative basis from April. It said the impact of the Middle East conflict is being partly offset by momentum in the global technology cycle driven by artificial intelligence.
The report said world trade growth is expected to slow to 3.5 percent in 2026 from 5 percent in 2025 before recovering to 4.3 percent in 2027.
Global headline inflation is forecast to rise to 4.7 percent in 2026 from 4.1 percent in 2025 before easing to 3.9 percent in 2027, indicating that the disinflation trend in place since early 2024 has stalled.
The IMF warned that risks remain tilted to the downside, including renewed conflict, trade fragmentation and a possible correction in technology-driven expectations. It said upside risks could come from faster normalization in energy markets, stronger technology investment and structural reforms that raise medium-term growth.
