The International Monetary Fund (IMF) revised Saudi Arabia’s 2025 growth forecast to 3.5%, up from a 3% forecast in April, citing strong domestic demand from government-led projects and the planned phase-out of Opec+ oil production cuts, it said in a statement last Thursday. The fund projects a non-oil real GDP growth of 3.4% this year, down 0.8 percentage points from last year.

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Looking ahead: The IMF sees the Kingdom’s GDP accelerating to 3.9% in 2026, before stabilizing at around 3.3% in the medium term. Non-oil growth is expected to approach 4% by 2027 before stabilizing at 3.5% by 2030, fueled by domestic demand and momentum from hosting large-scale international events.

Inflation is set to remain low and stable at around 2% this year, anchored by the currency’s peg to the USD, domestic subsidies, and a flexible labor supply. The headline inflation rate is now “contained” by decelerating rent increases and high real interest rates, despite a slight rise in April, the statement said.

Widening twin deficits: The fund expects our current account deficit to peak at 3.9% of GDP in 2027, driven by investment-related imports and remittances outflows, which will be partially offset by growing non-oil exports and tourism revenues. On the fiscal side, the fund penciled in a deficit of 4.3% of GDP this year — a figure the IMF considers appropriate to fund Vision 2030 projects.

.. but not for long: Both deficits are forecast to narrow by 2030, with the current deficit contracting to 3.4% of GDP and the fiscal deficit dropping to around 3.3% of GDP through improved spending efficiency.

ICYMI- S&P Global projected a slightly more optimistic 3.7% growth for 2025, 3.9% for 2026, and 3.2% for 2027 last week. Meanwhile, the World Bank kept its GDP forecasts for the Kingdom unchanged earlier this month, projecting 2.8% growth in 2025 and 4.5% in 2026.

REMEMBER- Gastat recently updated its nominal and real GDP historical data over 2011-2024 as part of a revision project that looks to better capture economic transformation with more detailed insights over the performance of key sectors in the economy. GDP growth during 1Q 2025 was revised upwards to 3.4% y-o-y, from the 2.7% figure reported back in May.

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