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The World Bank revised upward its 2025 GDP growth forecast for Saudi Arabia to 3.2%, marking an increase of 0.4 percentage points from its previous forecast in June, North Africa, Afghanistan, and Pakistan (MENAAP) Economic Update report (pdf). Growth in 2026 is expected to accelerate further to hit 4.3%, a downgrade of 0.2 percentage points compated to the bank's June forecast. Meanwhile, 2024 will see a slight acceleration to 4.4%.
The drivers: The bank said the upwards revision came on the back of elevated oil output, as Opec+ has been hiking production quotas since April. Robust non-oil sectors, especially services, are strongly contributing to GDP growth.
Our fiscal deficit is projected to widen: The World Bank now forecasts our fiscal deficit to expand this year by 0.6 percentage points to 3.1%, edging further to 3.3% in 2026, which matches the Finance Ministry’s projections. Meanwhile, the current account deficit is set to narrow by 0.2 percentage points to 0.3% this year, changing into a surplus of 0.3% in 2026.
Inflation is predicted to accelerate by 0.2 percentage points to hit 2.3% this year, in line with FinMin’s projections. The international lender expects inflation to take a modest downward trajectory to reach 2.2% in 2026, slightly above the Ministry forecasts which see inflation easing to 2% next year.
The World Bank upgrade follows a recent upgrade from the IMF, which raised its forecast for Saudi Arabia’s 2025 GDP growth to 3.6%, up 0.6 percentage points from its April outlook, while raising its 2026 forecast by 0.2 percentage points to 3.9%. Both fall behind FinMin’s latest projections, which expect our GDP to expand at a 4.6% clip in 2026, up from 4.4% this year, on the back of growth in non-oil activities. Meanwhile, a recent Reuters poll anticipates Saudi Arabia to record 3.8% growth this year.
The GCC region at large is expected to expand at 3.5% this year, up by 0.3 percentage points from the bank’s last forecast, and significantly higher than the 2.2% growth achieved in 2024. This uptick is mainly driven by the elevated phasing out of OPEC+ production cuts, and by robust expansion in non-oil sectors.
