Saudi Arabia’s economy is expected to grow by 3.3% in 2025 and 4.1% in 2026, as per the International Monetary Fund (IMF). These projections are influenced by the ongoing OPEC+ agreement on oil production cuts, which is affecting short-term growth expectations.
The IMF’s January 2025 World Economic Outlook Update also predicts that the Middle East and Central Asia will see growth of 3.6% in 2025, increasing slightly to 3.9% in 2026. These figures are lower than earlier estimates, mainly due to revised forecasts for Saudi Arabia, initially set at 4.6% for 2025. As the region’s largest economy, Saudi Arabia significantly impacts the broader regional outlook.
Additional challenges such as inflation and global uncertainties are affecting the region’s economic prospects. However, Saudi Arabia’s Vision 2030 aims to diversify the economy by expanding sectors like tourism, technology, and renewable energy, supporting long-term growth.
Global Economic Trends
Globally, the IMF forecasts a stable economic growth of 3.3% for both 2025 and 2026. Advanced economies are expected to grow by 1.9% in 2025 and 1.8% in 2026, facing persistent issues like inflation and geopolitical tensions. The US is projected to lead with a growth rate of 2.7% in 2025, slowing to 2.1% in 2026.
Emerging markets are anticipated to grow by 4.2% in 2025 and 4.3% in 2026, driven by strong performances from India and China. India is expected to maintain robust growth at 6.5%, while China is projected to grow by 4.6% in 2025 and 4.5% in 2026.
Saudi Arabia’s Economic Outlook
The reduction in Saudi Arabia’s growth forecast is linked to the OPEC+ agreement, which limits oil production to stabilize prices, impacting oil revenues and GDP. Despite this, Saudi Arabia is implementing economic reforms to reduce oil dependency, developing projects like NEOM and investing in green energy and infrastructure for sustainable growth.
Vision 2030 and Sectoral Diversification
Saudi Arabia’s Vision 2030 is showing success in diversifying the economy, with non-oil sectors, especially tourism, seeing significant growth. The Kingdom’s efforts to become a global destination have increased international visitors, boosting economic development.
Moreover, the financial sector and emerging industries like technology and renewable energy are crucial in enhancing GDP growth. As the Middle East’s largest economy, Saudi Arabia plays a vital role in regional economic stability. The IMF notes that the region’s growth heavily relies on developments in Saudi Arabia, despite significant reforms in other countries like Egypt and Gulf states.