Non-oil sectors going strong: The non-oil economy is forecast to expand at 4% this year and the next, buoyed by greater gains from retail and hospitality activities alongside tourism. “These activities collectively account for almost 21% of non-oil GDP, up from 18.5% in 2022. Manufacturing and transportation will also figure more, supported by rising industrial capacity and continued investment in logistics or transport,” the report said.

MEANWHILE- Oil GDP is forecast to increase by 7.8% y-o-y in 2026, up from a 5.8% rise in 2025. The lender expects oil production to rise to 10.22 mn bbl / d in 2026, compared to 9.48 mn bbl / d projected for 2025.

Inflation is expected to remain contained at around 2% in 2026 amid a slowdown in rental inflation — a component that constitutes about 20% of the CPI basket — which recorded a 5.7% y-o-y increase in October.

Fiscal deficit is seen narrowing to 4% in 2026 from an expected 5% in 2025, the bankprojects. The wider 2025 shortfall is attributed to expected reduced oil revenues from Aramco due to lower oil prices, though increased oil production and buoyant non-oil revenues are expected to soften the impact.

The government is exercising greater fiscal discipline, with expenditure growth set to decelerate in 2025 before recording 2.5% growth in 2026. This fiscal position comes as the central government debt is set to rise to 33% of GDP in 2026, up from 30.5% in 2025.

How does this compare to other forecasts?

  • ICAEW expects Saudi Arabia's GDP growth to slow down slightly to 4.3% in 2026;
  • Fitch’s BMI sees Saudi’s GDP growing 3.8% in 2025 and accelerating to 4.1% in 2026;
  • The IMF upgraded its growth forecasts to 4% in both 2025 and 2026;
  • The World Bank has a more dispersed forecast of 2.8% in 2025 and 4.5% in 2026.
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