The International Monetary Fund now expects Saudi Arabia economic growth to reach 3.6 percent next year. This increase, in turn, follows strong non-oil sector gains and expected changes in oil output policies. Moreover, the upgraded forecast marks an improvement over the earlier 3 percent projection.
According to the latest update, Saudi Arabia economic growth will likely exceed the global average of 3 percent. Furthermore, it may also outperform most neighboring Gulf economies. Importantly, the non-oil economy continues to serve as a powerful engine for expansion.
Looking ahead, the IMF projects that Saudi Arabia economic growth could climb to 3.9 percent the following year. Subsequently, it is expected to stabilize around 3.5 percent over the medium term. Clearly, this steady pace reflects ongoing non-oil development efforts and structural reforms.
Though non-oil GDP growth may slow slightly next year, it will remain strong. Specifically, the IMF forecasts a 3.4 percent rise in this area, followed by gradual improvement toward 4 percent by 2027. In the long run, growth in this sector will help sustain broader economic expansion.
Labor market conditions are also improving, therefore adding further momentum to Saudi Arabia economic growth. Unemployment among Saudi citizens has reached a record low, driven by reforms and targeted investments across multiple sectors.
Inflation remains in check, holding near 2 percent. Together with stable prices, the dollar peg and subsidies provide a sound base for the Kingdom’s economic plans. As a result, these factors continue to support Saudi Arabia economic growth.
The IMF backed the government’s plan to spend more in 2025, even with a larger deficit. However, it advised against rapid spending cuts, which could weaken growth. Instead, the focus should remain on raising non-oil revenue and reducing subsidies gradually.
Saudi Arabia’s banking sector also contributes to its economic resilience. Although some credit and funding pressures exist, the system stays strong due to proactive regulation. Notably, new capital buffers reinforce financial stability.
Finally, reforms in governance, education, digitalization, and capital markets remain essential. Ultimately, these long-term efforts will help sustain Saudi Arabia economic growth and drive diversification, regardless of oil market trends.
