Saudi Arabia’s GDP is forecasted to grow 4.6% in 2026, on the back of expected growth in non-oil activities, the Finance Ministry said in its pre-budget statement for FY 2026 (pdf). The budget deficit is projected to stand at SAR 165 bn, or 3.3% of GDP in 2026 — 2.0 percentage points lower than the government’s expectation of a 5.3% deficit in 2025.

Money in, money out: Total revenues are expected to come in at SAR 1.147 tn in 2026, which is below the SAR 1.184 tn the ministry had budgeted for 2025, but above the estimated actual revenue of SAR 1.091 tn. Expenditures are forecast at SAR 1.313 tn in 2026, lower than the SAR 1.336 tn estimated for 2025, but still above the SAR 1.285 tn initially budgeted. The ministry said the outlook reflects commitments to Vision 2030 programs, infrastructure, and social initiatives, supported by both oil and non-oil revenues.

The ministry points at global risks on next year’s budget, such as geopolitical tensions, protectionist trade policies, supply chain disruptions, and uncertainty over US monetary policy, which could pressure global trade, oil demand, and investment flows. However, the government is adopting a cautious fiscal strategy, a conservative debt management, and flexible long-term planning to sustain stability while supporting economic diversification.

FinMin’s budget scenarios for 2026, with SAR 1.313 tn in expenditures:

  • Baseline scenario: A budget deficit of SAR 165 bn, with revenues at SAR 1.147 tn;
  • Low scenario: A budget deficit of SAR 250 bn, with revenues at SAR 1.063 tn;
  • High scenario: A budget deficit of SAR 107 bn, with revenues at SAR 1.21 tn.

Plugging the gap: The Kingdom will continue to draw on debt markets to meet its financing needs, as its strong fiscal position allows it to maintain its reserves and draw on an “additional fiscal space” to fill funding gaps. The ministry is set to introduce an annual medium-term borrowing plan through the National Debt Management Center, as it looks to shore up debt sustainability and diversify funding by accessing global debt markets.

For 2025, real GDP is forecasted to grow by 4.4%, buoyed by a 5% rise in non-oil activities, on the back of stronger domestic demand and job creation. The ministry expects to record a budget deficit of SAR 245 bn (5.3% of GDP) in 2025, compared to a SAR 101 deficit in its approved budget for the year, and more than doubling from 2024’s SAR 115.6 bn deficit.

Inflation is expected to accelerate to 2.3% in 2025 from last year’s 1.7%, on the back of “protective measures and policies.” Meanwhile, it is projected to ease to 2% the following year. Bloomberg also had the story.

REMEMBER- The Kingdom’s real GDP grew 3.9% y-o-y in 2Q 2025, pushed by a 4.6% growth in non-oil activities.

Varied outlooks: The IMF recently raised its forecast for Saudi Arabia’s 2025 GDP growth to 3.6%, up 0.6 percentage points from its April outlook. It has also upgraded its 2026 forecast by 0.2 percentage points to 3.9%. The OECD likewise revised up its 2025 projection to 3.7%, 1.9 percentage points higher than its June estimate. A recent Reuters poll anticipates Saudi Arabia to record 3.8% growth this year. Meanwhile, the World Bank maintained its June estimates of 2.8% growth for 2025 and 4.5% for 2026.

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