Economists slashed Saudi Arabia’s 2026 growth forecast — and bet the Kingdom will lead the Gulf’s recovery next year

The war battered Saudi Arabia's near-term economic outlook, but economists still expect that the Kingdom will lead the Gulf out of the downturn next year. Bloomberg more than halved its 2026 Saudi growth forecast to 1.6% after conducting a survey on 12-17 June, down from 4.4% three months ago. It also raised the 2027 number to 5.8%, up from 3.5% — one of the survey’s sharpest upgrades and an indication that Saudi Arabia and Qatar will anchor the regional rebound.

The non-oil economy absorbed the shocks from the war far better than the headline number suggests. Economists trimmed their 2026 non-oil growth forecasts to 3%, down from 4%. The figure remains firmly positive, even as they flipped the UAE (-2.8%), Qatar (-2%), and Kuwait’s (-2.2%) non-oil economies into outright contraction.

REMEMBER- GDP growth reached 3% y-o-y in 1Q, with non-oil activity contributing 1.7 percentage points. Pundits credit the East-West pipeline for keeping export revenue flowing while shipping through the Gulf virtually stopped. Economists also tied the resilience to steady domestic demand and consumer confidence holding through the fighting.

Looking ahead

The caveat: The forecast rests on Opec+ continuing to unwind output cuts, as well as gigaproject spending holding through 2027, when non-oil growth is forecast to recover to 3.4%.

Watch for inflation: The panel nudged its 2026 forecast up to 2.3% from 1.8%, citing higher food and freight costs. Inflation proved resilient in the first few months of the year, still running at 1.8% in May.