The Kingdom gets another GDP forecast upgrade: The International Monetary Fund (IMF) raised its forecast for Saudi Arabia’s GDP growth this year and next to 4.0%, according to the fund’s Regional Economic Outlook report (pdf). This marks an upward revision of 0.4 percentage points for 2025 and 0.1 percentage points for 2026 from the fund’s latest upgrade in July.

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How this compares: The IMF’s upward revision follows a recent upgrade earlier this month from the World Bank, which raised the Kingdom’s 2025 growth forecast by 0.4 percentage points to 3.2% from its previous forecast in June. The World Bank also expects growth in 2026 to accelerate further to 4.3%. Meanwhile, a recent Reuters poll anticipates Saudi Arabia to record 3.8% growth this year. These projections all fall behind the Finance Ministry’s latest outlook, which expects the country’s GDP to expand at a 4.6% clip in 2026, up from a projected 4.4% this year, on the back of growth in non-oil activities.

While our GDP upgrade is partly buoyed by Opec’s move to ramp up oil production, the “robustness in the Saudi non-oil sector” is also a driving factor, the IMF’s director for the Middle East, North Africa and Central Asia Jihad Azour told Bloomberg.

Our economy would benefit most from a rebound in oil prices and output, despite progress in diversification efforts, Azour said. Any output increase by 1 mn bbl per day enhances the country’s fiscal balance by 3.2% of GDP and the current account by 3.7%, he added. The Finance Ministry estimates its budget deficit to stand at SAR 165 bn, or 3.3% of GDP in 2026 — 2.0 percentage points lower than its estimation of a 5.3% deficit in 2025.

REMEMBER- The Kingdom, along with other Opec+ members, agreed earlier this month to add a total of 137k bbl / d to production again next month, after approving the same additional number of barrels for October as part of the group’s gradual unwinding of its 1.65 mn bbl / d voluntary cuts.

A double-edged sword: While greater oil output would have “an immediate impact” on our economy, its benefits would not be long-lasting, and it would ultimately weigh down crude prices, Azour cautioned. A quicker-than-anticipated rebound in oil output could quickly turn into a supply glut, particularly if global demand doesn’t keep pace, the fund warned.

The pricing outlook: Brent prices dipped 18% this year to just over USD 61 / bbl, well below the Kingdom’s needs to balance its budget, according to the business information service. Under the IMF’s baseline scenario, based on September 2025 futures prices, oil prices are projected to stabilize at an average of USD 69 / bbl in 2025 — a slight increase from July’s projection, but well below the 2024 average of USD 79 / bbl. For the year ahead, oil prices are forecast to drop to USD 66 / bbl, before holding steady at that range through 2030.

THE REGIONAL OUTLOOK-

The MENA region’s outlook was revised upward by 0.1 percentage points from July’s forecast to 3.3% in 2025, while the projection for next year’s growth was also revised upward by 0.3 percentage points to 3.7%. The fund now expects the region’s GDP to remain broadly steady over the medium term.

“Economic activity in the Middle East and North Africa has shown remarkable resilience, despite persistent global uncertainty and heightened geopolitical tensions. The region has largely avoided direct fallout from higher US tariffs and global trade restrictions. And while recent tensions have raised concern, their impact has been limited and short-lived,” Azour said in a press briefing (pdf).

The GCC is expected to grow 3.9% this year, up by 0.9 percentage points from the fund’s last forecast, and significantly higher than the 2.2% growth achieved in 2024. This uptick is mainly driven by the accelerated phasing out of OPEC+ production cuts and robust expansion in non-oil sectors. Growth for 2026 was also upgraded by 0.2 percentage points from the previous forecast to 4.3%.

Beyond oil revenues, diversification efforts across the GCC are gaining momentum, with non-oil sectors participating significantly in sustaining growth and job creation, Azour said during the press briefing.

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