Saudi Edition 
Egypt Edition 
UAE Edition 
MENA <> India Corridor 
Logistics (MENA) 
Climate (MENA) 
Share
Riyad Capital sees the Kingdom’s GDP growth increasing to 3.5% in 2025 and 4.2% in 2026, driven by robust growth in the non-oil activity and an anticipated rebound in the oil sector, it said in its latest Saudi Economic Chartbook report for 2Q 2025 (pdf).
Driving the growth: Non-oil growth is seen expanding at a 4.1% clip in 2025, before accelerating further to 4.3% in 2026, down slightly from 4.8% in 2024. “We project continued solid growth for non-oil activities, fostered by a growth-oriented fiscal policy, supported by PIF, with a focus on increased investment spending, which will support the non-oil economy in the coming years,” the firm writes.
Increased oil output will help boost growth across the next two years: Riyad Capital expects oil activities to grow by 3.5% this year and by 5.4% in the next, buoyed by Opec+ accelerating voluntary output cuts, originally planned to take place gradually until 3Q 2026.
Higher than IMF expectations: the International Monetary Fund (IMF) cut its forecasts for GDP growth last month, by 0.3 percentage points to 3% this year and by 0.4 percentage points to 3.7% in 2026.
More budget deficits: The firm expects the Kingdom to see a fiscal deficit of 4.5% of GDP this year, which will then narrow to 3.6% in 2026, attributing this to the government sticking to “its original spending plan in order to spur growth and foster the economic transformation.” Meanwhile, the current account balance is expected to see a deficit of 3.6% of GDP in 2025, before narrowing to 2.9% of GDP in the following year, which Riyad Capital says will be driven by higher oil exports and improved tourism revenues.
The inflation situation: The firm sees inflation rising to 2.5% in 2025, before easing slightly to 2.3% in 2026, up from an inflation reading of 1.7% in 2024.
This is a less optimistic view on inflation than some others, with the IMF having recently cut its inflation forecasts to 2% for both 2025 and 2026, while Capital Economics expects inflation to hover around 2-2.5% this year before slowing to 2% in 2026.
ALSO- Riyad Capital expects the Saudi Central Bank to cut interest rates by 50 bps in 2025 and 2026, following in the footsteps of the US Federal Reserve’s gradual easing measures.
