Khaberni - The International Monetary Fund has raised its growth forecasts for the Saudi economy for the years 2025 and 2026 for the third consecutive time in about six months, indicating the growing resilience of the economy as it receives simultaneous support from both the oil and non-oil sectors.
The Fund expects the Saudi economy, the largest in the Arab world, to grow by 4.3% in 2025 and 4.5% in 2026, an increase of 0.3 percentage points and 0.5 percentage points respectively compared to its estimates issued last October, according to the latest update of the World Economic Outlook report.
This adjustment brings the IMF's estimates closer to the official figures, which estimate a growth of 4.4% in 2025 and 4.6% this year, according to the preliminary statement of Saudi Arabia's budget for 2026.
Expectations for the growth of the Saudi economy are improving, with momentum returning to the oil sector after Saudi Arabia's crude production increases as part of the OPEC+ alliance's output hikes. At the same time, growth in non-oil activities continues to be a major driver of the Saudi economy, supported by the expansion of sectors such as tourism, hospitality, industry, and services.
Financial Resilience Supports Saudi Arabia Amid a Momentum for Reforms
This improvement follows Fitch's affirmation of Saudi Arabia's credit rating at 'A+' with a stable outlook, based on the financial resilience that the Kingdom enjoys and the momentum of social and economic reforms. Fitch also expected the Saudi economy to benefit from increased oil production this year as well as the "healthy" prospects for non-oil activities.
Additionally, the agency hinted that the extensive social and economic reforms implemented under "Vision 2030" contribute to diversifying economic activities, albeit at a tangible cost to the budget. Fitch also emphasized that the momentum of reforms "remains strong," and pointed to recent efforts including a new investment law, and greater openness in real estate and stock markets to foreign investors. Nonetheless, Fitch saw the non-oil sector's growth capacity during a period of reduced government and related entities' spending as "under test."
Saudi Arabia Ready for a Tougher Environment
Earlier this month, the Fund mentioned that Saudi Arabia is in a "good" position to enter a tougher environment characterized by lower oil prices and increased financing needs, indicating that the Kingdom maintains a "strong position" in facing the challenge of continuing to diversify economic activities away from oil as the non-oil economy showed resilience in 2025.
The IMF clarified that the Saudi economy's resilience in 2025 confirms "the progress already made in reducing exposure to oil price volatility." Despite a drop in oil prices to about 30% below the peak reached in 2022, the non-oil economy managed to maintain its strong momentum.
Regarding next year, the international financial institution expects the Saudi economy to grow at a rate of 3.6%, which also represents an upward revision of the forecasts from last October.
These estimates align with the average estimations of a survey conducted by "Bloomberg," which indicates that the Saudi economy grew by about 4.5% in the past two years and this year.
The Saudi Minister of Economy and Planning Faisal Al Ibrahim said last October that the economy is set to grow by 5.1% during 2025.
Improvement in the Middle East and North Africa
On a broader regional level, the IMF has raised its growth forecasts for the Middle East and North Africa's economy to 3.4% in 2025 and to accelerate to 3.9% in 2026, increases of 0.1 and 0.2 percentage points respectively compared to the October estimates, indicating a gradual improvement in the economic activity outlook.
Regarding energy markets, the Fund expects oil prices to remain at low levels with a tendency to decline in the face of slowing global demand growth and strong supply growth. However, it pointed to a "flexible minimum price" supported by the high production costs of some producers and strategic storage operations in China, alongside the approach of the OPEC+ alliance aimed at avoiding price collapse.
According to the report, the average oil price is estimated to be $62.1 per barrel in 2026, about four dollars lower than previous estimates, compared to about $68.9 per barrel in 2025, expected to stabilize at $62.17 next year.
