Saudi Arabia’s economic growth has slowed, largely due to a steep drop in oil prices and ongoing global trade tensions. Recent data shows the non-oil sector expanded by 4.2%, but overall GDP growth was limited to 2.7%, with oil-related activities shrinking by 1.4%.
This performance puts Saudi Arabia behind its own non-oil growth targets for the year. The International Monetary Fund has also reduced its forecasts for the country’s GDP growth in both 2025 and 2026, reflecting concerns about the uncertain economic outlook.
Brent crude’s average price fell to a four-year low, creating budgetary pressure. The IMF estimates Saudi Arabia needs oil prices above $91 a barrel to balance its finances, but recent prices have been much lower. As a result, the country is expected to increase borrowing, with the Public Investment Fund recently issuing $1.25 billion in sukuks to support its wide-ranging projects.
Spending reductions are already being seen across public sector companies, signaling a cautious approach as Saudi Arabia navigates a challenging period for its oil-dependent economy.