Saudi Arabia: IMF raises growth forecast to 3.5 percent

The International Monetary Fund (IMF) has raised its economic growth forecast for Saudi Arabia to 3.5% in 2025. The IMF has raised its economic growth forecast for Saudi Arabia, benefiting from the gradual elimination of production cuts by the OPEC+ alliance. The Saudi economy is expected to grow by 3.5% in 2025, up from the IMF's previous forecast of 3% in April, and by 3.9% in 2026, up 0.2% from the previous forecast. The IMF said the Kingdom's economy has demonstrated its resilience to shocks and that economic growth will continue to improve in 2025, driven by strong domestic demand and government projects under Vision 2030, despite global challenges and lower expectations for commodity prices. In the final statement issued by IMF experts at the end of their visit to Saudi Arabia for the 2025 Article IV consultations, the Fund forecast non-oil GDP growth of 3.5 percent in 2025. This reflects the continued implementation of development projects through public and private investment, coupled with strong lending growth, which will help strengthen domestic demand and cushion the impact of falling oil prices.

The Fund said the impact of global trade tensions on Saudi Arabia will be limited, as petroleum products account for 78% of the Kingdom’s exports to the US and are exempt from US tariffs. The Fund expects non-oil growth to reach nearly 4% by 2027, supported by project momentum and preparations to host major global events, before stabilizing at 3.5% in 2030. The Fund noted that inflation will remain stable at around 2%, supported by a solid currency peg to the US dollar, continued domestic support and the flexible availability of expatriate labor. The impact of imported inflation from rising global tariffs is expected to remain limited. The Fund expects the deficit to be financed through withdrawals from deposits and foreign borrowings. However, the Fund believes that foreign exchange reserves will remain at adequate levels, along with foreign assets held by the Public Investment Fund and other government entities, which constitute additional solid financial buffers.