01.05.2026
Saudi Arabia’s economy strengthened in 2025, supported by the recovery of oil activity, resilient non-oil sectors and continued implementation of Vision 2030 projects. Growth is expected to moderate in 2026 amid heightened regional uncertainty, before accelerating again in 2027 as oil and non-oil activity expand. Inflation remains low by regional and global standards, although housing costs continue to create price pressures. Fiscal pressures have increased due to weaker oil revenues and high spending needs, while the external position remains sensitive to oil prices, export routes and regional security risks.
| Indicators | 2025 | 2026 | 2027 |
|---|---|---|---|
| GDP growth (%, yoy) | 4.5 | 3.1 | 4.9 |
| Inflation (%, yoy) | 2.0 | 2.8 | 2.6 |
| Employment rate (% of working-age population, 15+) | 60.3 | 60.3 | 60.3 |
| Fiscal balance (% of GDP) | -6.0 | -3.0 | -3.2 |
| Gross public debt (% of GDP) | 33.0 | 32.4 | 34.9 |
| Current account balance (% of GDP) | -2.7 | 3.3 | -2.2 |
Growth remains supported by oil and non-oil activity
Saudi Arabia’s real GDP growth rose to an estimated 4.5% in 2025, compared with 2.6% in 2024. The recovery was supported by both oil and non-oil activities, including the gradual phasing-out of OPEC+ voluntary production cuts from April 2025. Non-oil growth remained driven by trade, hospitality, finance, insurance, real estate and business services.
Growth is projected to slow to 3.1% in 2026, reflecting heightened regional uncertainty and risks to oil production and exports. It is expected to strengthen again to 4.9% in 2027, supported by continued expansion in oil output and steady non-oil activity. Vision 2030 projects, infrastructure development, tourism and private-sector reforms should continue to support medium-term growth.
Inflation remains contained, but housing pressures persist
Inflation remained low in 2025, averaging around 2.0%, mainly driven by housing and rental costs. Food and beverage prices remained relatively contained, helping keep overall inflation moderate. The government’s decision to freeze rents in Riyadh for five years reflects growing concerns about housing affordability.
Inflation is projected to rise to 2.8% in 2026 before easing slightly to 2.6% in 2027. Price pressures are expected to remain manageable, but risks come from housing costs, imported inflation, energy and freight costs, and possible spillovers from regional instability.
Fiscal pressures remain elevated
The fiscal deficit widened significantly to an estimated 6.0% of GDP in 2025, mainly due to lower oil revenues and continued spending on infrastructure and development projects. Public debt increased from 25.9% of GDP in 2024 to around 33.0% in 2025, as the government relied more on borrowing to finance investment and fiscal needs.
The deficit is projected to narrow to 3.0% of GDP in 2026 and remain close to that level in 2027. Public debt remains moderate by international standards, but is expected to rise gradually over the medium term. Maintaining fiscal discipline while funding Vision 2030 priorities will remain a central policy challenge.
External balance remains sensitive to oil and regional risks
The current account moved into deficit in 2025, reflecting weaker oil revenues, higher imports and investment-related external payments. A temporary surplus is projected in 2026, supported by higher global oil prices, before the balance returns to deficit in 2027.
Saudi Arabia’s external position remains highly dependent on oil prices, production volumes and export infrastructure. Regional tensions, disruption risks around the Strait of Hormuz, and threats to energy infrastructure could affect exports, investor sentiment and financing conditions. At the same time, strong reserve buffers and continued non-oil diversification provide important support.
Overall outlook
Saudi Arabia is expected to maintain solid growth in 2026–2027, although the outlook is more uncertain due to regional security risks and oil-market volatility. Non-oil sectors should continue expanding under Vision 2030, but hydrocarbons will remain a major driver of growth, fiscal revenue and the external balance. The main medium-term challenge is to sustain diversification while managing fiscal pressures, housing affordability, and exposure to oil and geopolitical shocks.
Sources:
World Bank, Saudi Arabia Macro Poverty Outlook, April 2026.
World Bank, Saudi Arabia Country Overview, 2026.
International Monetary Fund, World Economic Outlook, April 2026.
International Monetary Fund, Saudi Arabia: 2025 Article IV Consultation, August 2025.
Ministry of Finance of Saudi Arabia, Pre-Budget Statement FY2026.
