The World Bank cut its GDP growth forecasts for Saudi Arabia to 2.8% in 2025 and 4.5% in 2026 in its April MENA Economic Update (pdf). The bank had previously forecast 3.4% growth for 2025 and 5.4% for 2026.

The rationale: The projected growth is attributed to anticipated increases in oil production and ongoing diversification efforts to expand non-oil sectors. However, this outlook is subject to downside risks, including potential volatility in global oil markets, a slowdown in demand, and heightened uncertainty.

REFRESHER- OPEC+ is moving ahead with its planned supply hikes, citing a positive market outlook, but has left room to pause or reverse course if needed. This raises questions about the Kingdom sticking to output hikes, as falling oil prices could pressure the government’s fiscal position and lead to scaling back projects.

A mixed profile: While the Kingdom is less integrated into global value chains than some of its MENA neighbors, it has high “pure forward linkages” — including exports of refined petroleum and chemical products — the bank said. The report also highlighted a decline in labor productivity growth, as well as relatively low levels of investment in physical and human capital and R&D by the private sector.

MEANWHILE- A Reuters poll of 19 economists projected a more optimistic 3.9% growth for the year — a downward revision from 4.0% in January.

BUT- Concerns remain: “As global recession fears rise, a lower oil price would also weigh on Saudi exports and fiscal revenues … Given the weakening outlook for both the volumes and the prices of Saudi Arabia’s key exports, we see downside risk to our growth forecast,” Alina Slyusarchuk, chief CEEMEA economist at Morgan Stanley, told the newswire.

REMEMBER- The International Monetary Fund cut its growth forecast for the Kingdom’s GDP growth by 0.3 percentage points to 3% in 2025 and by 0.4 percentage points to 3.7% in 2026. S&P Global ealier expected our GDP to grow by 2.8% in 2025, while Fitch Ratings, more optimistic than most, penciled in 3.4% in 2025 and 4.6% in 2026.

THE REGIONAL PICTURE-

The broader MENA region is forecast to expand 2.6% in 2025 and 3.7% in 2026, marking sharper downgrades from earlier forecasts of 3.4% and 4.1%. The downward revisions reflect tighter global financial conditions, as well as a projected fall in remittances and worsening external balances amid capital outflows due to dampened consumer confidence and investor sentiment leading to capital outflows.

GCC economies will fare better: The GCC, as a whole, is now projected to grow 3.2% in 2025 and 4.5% in 2026, with both years’ figures revised down by just 0.1 percentage points from the World Bank’s January estimates. The resilience of Gulf economies comes on the back of strong non-oil sectors such as tourism, construction, and financial services.

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