IMF Article IV Projects Saudi Growth Rebounding to 5.5 Percent in 2027
The International Monetary Fund expects Saudi economic growth of 1.7 percent in 2026 before a rebound to 5.5 percent in 2027, as disruption to shipping and oil exports through the Strait of Hormuz gives way to a recovery in both oil and non-oil activity.
The Fund’s Executive Board completed its 2026 Article IV consultation with Saudi Arabia on 22 July. The press release and the accompanying staff report, Country Report 26/210, were published on 29 July.
Saudi GDP expanded 4.6 percent in 2025. The Fund expects non-oil growth to slow from 4.2 percent to 2.6 percent in 2026 before recovering to 4.5 percent in 2027, above the 2025 rate.
The projection table
| Indicator | 2025 | 2026 projection | 2027 projection |
|---|---|---|---|
| Real GDP growth, percent | 4.6 | 1.7 | 5.5 |
| Non-oil GDP growth, percent | 4.2 | 2.6 | 4.5 |
| CPI inflation, average percent | 2.0 | 2.2 | 2.1 |
| Revenue, percent of GDP | 23.3 | 23.5 | 24.1 |
| Expenditure, percent of GDP | 29.1 | 27.2 | 27.1 |
| Fiscal balance, percent of GDP | −5.8 | −3.7 | −3.1 |
| Public debt, percent of GDP | 31.8 | 32.1 | 34.4 |
| Non-oil primary balance, percent of non-oil GDP | −23.3 | −22.2 | −20.9 |
| Broad money, percent change | 8.4 | 5.2 | 7.6 |
| Credit to the private sector, percent change | 10.2 | 5.8 | 7.6 |
| Current account, percent of GDP | −2.6 | −0.3 | −0.8 |
| Foreign direct investment, percent of GDP | 2.6 | 1.5 | 1.5 |
| Reserves, months of imports | 13.7 | 13.9 | 14.1 |
| External debt, percent of GDP | 37.6 | 38.0 | 40.5 |
Source: IMF, country authorities and IMF staff estimates and projections.
Overall unemployment stood at 3.2 percent in 2025 and unemployment among Saudi nationals at 7.0 percent, with no forecasts published for either series. The real effective exchange rate declined 3.9 percent in 2025 and a further 2.9 percent in the latest available 2026 data.
The 2027 rebound draws on both oil and non-oil activity
The 2026 slowdown is not confined to the oil sector. The Fund projects oil GDP to contract 0.8 percent while non-oil GDP grows 2.6 percent, reflecting weaker trade, tourism, manufacturing and confidence.
In 2027 oil GDP is projected to expand 8.5 percent as shipping and export volumes normalise, while non-oil growth recovers to 4.5 percent. Together these lift headline growth to 5.5 percent. The non-oil projection for 2027 sits 0.3 percentage points above the 4.2 percent recorded in 2025, so the recovery is expected to more than restore the pre-disruption pace of the diversifying economy.
Infrastructure limited the fall in deliveries
The Fund said the near halt in shipping through the Strait of Hormuz curtailed oil exports and disrupted wider trade. Saudi Arabia limited the decline in deliveries by rerouting crude through the East-West pipeline to the Red Sea.
The staff report puts the pipeline’s capacity at up to 7 million barrels a day to the port of Yanbu, of which about 5 million barrels a day of crude can be loaded for export while the remainder feeds refineries. The pipeline reached that throughput by late March.
Higher oil prices more than compensated for lower export volumes in revenue terms, producing what the Fund described as an oil-revenue windfall even as lower physical volumes reduced real oil-sector growth.
Consolidation narrows the deficit while debt still rises
The central-government deficit is projected to narrow from 5.8 percent of GDP in 2025 to 3.7 percent in 2026 and 3.1 percent in 2027, a cumulative improvement of 2.7 percentage points.
The adjustment comes principally from expenditure, which falls from 29.1 percent of GDP to 27.1 percent over the two years, while revenue rises from 23.3 percent to 24.1 percent. The non-oil primary deficit improves from 23.3 percent of non-oil GDP to 22.2 percent and then 20.9 percent.
Public debt nonetheless rises from 31.8 percent of GDP to 32.1 percent and then 34.4 percent, an increase of 2.6 percentage points over two years. Narrower annual deficits still add to the stock, and the 32.1 percent figure for 2026 matches the April 2026 World Economic Outlook exactly. On that measure Saudi Arabia remains among the more lightly indebted economies in the region, well below the five Arab sovereigns projected above 80 percent of GDP this year.
Executive Directors said the modest reduction in the non-oil primary deficit in 2026 was appropriate and recommended that any fiscal response to the disruption be financed through spending reprioritisation. They added that temporary, targeted and transparent support could be used, and that Saudi Arabia retained fiscal space to respond if the shock deepened.
The current-account deficit nearly disappears in 2026
The current-account deficit is projected to narrow from 2.6 percent of GDP in 2025 to 0.3 percent in 2026 before widening to 0.8 percent in 2027, reflecting higher oil prices, lower imports during the shipping disruption and a stronger travel balance.
The quarterly path is sharper than the annual one. The current account moved from a deficit of 8.2 billion dollars in the fourth quarter of 2025 to a surplus of 4.1 billion dollars in the first quarter of 2026.
Reserve cover rises from 13.7 months of imports to 14.1 months by 2027, while external debt increases from 37.6 percent of GDP to 40.5 percent.
Money and credit slow with the economy
Broad money growth is projected to slow from 8.4 percent in 2025 to 5.2 percent in 2026 before recovering to 7.6 percent in 2027. Private-sector credit follows the same shape, slowing from 10.2 percent to 5.8 percent before returning to 7.6 percent.
Inflation rises modestly to 2.2 percent in 2026 as higher shipping and insurance costs feed through, then eases to 2.1 percent in 2027. The Fund expects subdued rent inflation, historically limited pass-through and caps on certain fuel and food prices to contain the increase.
Vision 2030 enters its tenth year
Executive Directors said Vision 2030 had strengthened the non-oil economy, expanded the private sector’s role, advanced diversification and delivered measurable improvements in labour-market outcomes, including female labour-force participation.
They welcomed the recalibrated Public Investment Fund strategy, with its emphasis on more selective capital allocation and a larger private-sector role, and highlighted deeper GCC integration as a route to greater regional resilience.
The Board supported maintaining the riyal’s peg to the dollar and commended the Saudi Central Bank’s liquidity management, bank capital and liquidity buffers, and progress in implementing the 2024 Financial Sector Assessment Program recommendations.
Why it matters
Growth of 4.6 percent in 2025, 1.7 percent in 2026 and 5.5 percent in 2027 describes a severe but temporary interruption rather than a conventional domestic downturn. The rebound is conditional: it assumes maritime traffic through the Strait normalises and oil deliveries recover. The Fund also identifies weaker global demand, tighter financial conditions, lower oil prices and prolonged regional disruption as downside risks.
The non-oil path is the better test of diversification, and it is projected to end 2027 above where it stood in 2025. For Gulf issuers and investors, a debt ratio in the low thirties with reserve cover above thirteen months leaves considerable room to absorb a shock of this kind.
What to watch
GASTAT’s quarterly national accounts and the Ministry of Finance’s quarterly budget reports offer the earliest tests of the Fund’s assumptions on growth, the fiscal deficit and the current account. Oil export volumes through both Gulf and Red Sea terminals, and the pace at which shipping through the Strait normalises, are the variables that carry the 2027 projection. Subsequent IMF forecast updates will show whether 5.5 percent survives contact with the outturn data.
Sources
IMF, press release 26/267 on the 2026 Article IV consultation with Saudi Arabia, 29 July 2026, and Country Report 26/210, published 29 July 2026. IMF, World Economic Outlook database, April 2026, where separately identified.
