IMF projects 1.7% growth for Saudi Arabia in 2026

The International Monetary Fund projected 1.7 percent growth for Saudi Arabia in 2026 in its Article IV assessment completed on 29 July. The Board’s review compares that outlook with 4.6 percent growth in 2025 and says the regional war disrupted trade and oil exports. These are forecasts published in July, not the final 2026 growth result. The IMF describes the outlook as dependent on how the conflict develops, including when maritime traffic through the Strait of Hormuz begins to normalize.

Growth in 2025 was supported by the unwinding of OPEC+ production cuts and strong domestic demand. The IMF says the economy entered 2026 with momentum, inflation below 2 percent and a resilient labour market. Conflict and the near halt in shipping through the Strait then curtailed oil and non-oil trade and weakened confidence. The sequence matters: last year’s strong expansion does not remove the economic effects of a new supply and transport shock.

The IMF projects non-oil GDP growth of 2.6 percent in 2026, slower than the 4.2 percent recorded in 2025. The overall growth outlook is linked not only to energy output but also to regional uncertainty affecting consumption, investment and services. The Fund says high-frequency indicators showed early signs of stabilization in non-oil activity in April–June after a likely contraction in March. That observation is not evidence that an annual recovery has already been completed.

For oil, the IMF expects higher prices to more than offset lower export volumes in 2026, generating additional revenue. Saudi Arabia’s East-West pipeline enabled oil to be redirected to Red Sea ports and helped limit the decline in deliveries. The report nevertheless stresses that the outlook remains highly uncertain until shipping through the Strait normalizes. A prolonged disruption could weigh again on trade and confidence. Higher potential oil receipts therefore do not, by themselves, erase volume losses or pressure on non-oil activity.

The Fund projects consumer inflation of 2.2 percent in 2026 and says higher shipping and insurance costs may be partly offset by price caps on some fuel and food items. It puts the current-account balance at minus 0.3 percent of GDP and the fiscal balance at minus 3.7 percent. Those indicators measure different things: one summarizes external payments and the other government revenue and spending. Their combination reflects a year in which higher oil prices may help public receipts while trade and price pressures remain.

In the IMF table, public debt is projected at 31.8 percent of GDP in 2025 and 32.1 percent in 2026. The Fund considers a modest reduction in the non-oil primary deficit appropriate and recommends that any fiscal support for the shock be temporary, targeted and transparent. Over the medium term it says fiscal consolidation and Vision 2030 reforms should support growth and diversification. These are the IMF’s policy assessments, not a newly adopted budget decision or government spending package.

The main downside risk identified by the IMF is continued disruption to shipping through Hormuz. That could further affect trade, confidence and investment in diversification. Faster normalization, higher oil prices or production, and stronger productivity reforms could support the outlook. These are scenarios described in the July assessment, not outcomes that have already occurred. New data on trade, output, prices and the budget will show how closely the forecasts reflect conditions as the year progresses.

Readers should keep three time layers separate: reported growth in 2025, IMF projections for 2026–27 and scenarios tied to conflict and energy-market developments. The Fund forecasts growth accelerating to 5.5 percent in 2027, with non-oil growth at 4.5 percent. That stronger path assumes maritime traffic normalizes and domestic demand holds up. The confirmed news is that the IMF Board completed the country assessment and published these projections; it does not establish the final result for 2026.