The World Bank revised Saudi Arabia’s 2025 growth forecast upwards, expecting our GDP to grow 3.8% this year, according to the latest Gulf Economic Update (pdf). This marks a 0.5% increase from the bank’s previous forecast in October.

(** Tap or click the headline above to read this story with all of the links to our background and outside sources.)

Oil still makes and breaks the budget: The healthy increase in non-oil revenues was not enough to offset the decline in oil revenues in 1H 2025. “Despite making strides in diversifying its sources of fiscal revenues, Saudi Arabia remains dependent on oil receipts requiring further structural reforms,” the World Bank said.

The bank expects the deficit to remain at 3.8% of GDP until 2027, higher than the 3.3% penciled in by the finance ministry for FY 2026, on the back of expansionary spending and lower oil prices. Meanwhile, the current account is projected to log a surplus in 2026-2027, supported by increased oil output.

  • The current account balance showed signs of recovery after weakening for several quarters, stabilizing at a small surplus of 0.5% of GDP in the first quarter of the year.

IN CONTEXT- Our deficit is estimated to balloon this year to SAR 245 bn (5.3% of GDP). The Kingdom tapped global capital markets to plug the deficit, capitalizing on low debt levels and recent Fed interest rate cuts. Debt reached 32% of GDP by the end of September, with USD 20 bn borrowed since the year began, according to the report.

Even more next year? Goldman Sachs expects the Kingdom to issue a record USD 25 bn in international debt instruments in 2026, up from USD 20 bn this year, Asharq Business reported on Friday. This trajectory will keep Saudi Arabia’s lead as the largest sovereign debt issuer in emerging markets. Goldman also expects local borrowing to reach USD 75 bn, with the debt-to-GDP ratio inching further up toward 44% by 2028.

The Kingdom’s fiscal planning is built on an oil price range of USD 60-63 per barrel, Goldman said, leading to a fiscal deficit of SAR 165 bn in 2026 as per the Finance Ministry estimates. Meanwhile, Riyad Bank’s chief economist Naif Al Gaith put the oil price needed to balance Saudi’s budget at USD 85 / bbl, according to Al Arabiya.

Tags: