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World Bank Sees Saudi Budget Deficit Halving, Current Account Surplus of 3.3% in 2026

Riyadh, Saudi Arabia (Reuters)
Riyadh, Saudi Arabia (Reuters)
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World Bank Sees Saudi Budget Deficit Halving, Current Account Surplus of 3.3% in 2026

Riyadh, Saudi Arabia (Reuters)
Riyadh, Saudi Arabia (Reuters)

As regional economies reel from a complex and uncertain geopolitical landscape, with shipping disruptions through the Strait of Hormuz adding pressure, the latest World Bank report points to standout resilience in Saudi Arabia’s economy.

The data show the kingdom on a fiscal consolidation path to strengthen its fiscal position, with the budget deficit set to halve and the current account shifting from deficit to surplus.

April data from the World Bank indicate Saudi Arabia has not only built solid “economic buffers,” but is also leveraging geopolitical pressures to advance structural reforms.

While much of the region faces sharp fiscal strain and negative growth, the kingdom is moving steadily ahead, recording the strongest growth among regional peers and reinforcing its role as a pillar of regional stability.

Despite broad downward revisions, Saudi Arabia remains the region’s top performer. Growth forecasts for the wider region have been cut to 1.8%, while the kingdom is expected to expand by 3.1%.

Current account shifts to a 3.3% surplus

World Bank data point to a shift in Saudi Arabia’s current account. After a projected deficit of 2.7% of GDP in 2025, forecasts for 2026 point to a surplus of 3.3%.

A current account surplus means exports of goods and services exceed imports, strengthening the balance of payments. It also reflects rising net foreign assets and stronger financing capacity, supported by solid export performance and moderate domestic demand.

The shift carries broader weight. Moving from deficit to surplus positions, Saudi Arabia becomes a net lender to the global economy, with oil export revenues, fast-growing non-oil sectors, and returns on foreign investments outpacing spending on imports and services.

Beyond the headline figures, the surplus acts as an external buffer, supporting currency stability and generating strong liquidity flows. This gives financial institutions and sovereign funds greater room to sustain investment in major development projects, while helping shield the economy from disruptions in global supply chains and shipping routes.

Deficit set to halve

Fiscal data show improved expenditure control and revenue growth. The World Bank expects the deficit to narrow from 6.4% of GDP in 2025 to 3.0% in 2026, below the Finance Ministry’s estimate of 3.3%.

The shift reflects tighter fiscal discipline. Despite the cost of regional tensions, the gap between revenue and spending is set to shrink by half in one year.

This reflects effective fiscal policy, including stronger tax collection and public financial management, rising non-oil revenues that reduce reliance on energy price swings, and more efficient public spending focused on high-impact development projects, limiting the need for external borrowing and supporting long-term fiscal balance.

Saudi Arabia leads per capita growth

The April 2026 report also shows a sharp divergence in per capita growth across the region. While countries such as Kuwait (-7.7%) and Qatar (-7.4%) face steep contractions, Saudi Arabia stands out with an expected per capita growth rate of 1.4%.

Inflation remains contained at 2.8%, helping preserve purchasing power despite global increases in energy and shipping costs driven by maritime disruptions. This stability protects the broader economy from imported inflation pressures.

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IMF: Egypt Staff Mission May Lead to $1.6 Billion Disbursement this Summer

Traffic is seen on a street in central Cairo. Photo: Asharq Al-Awsat
Traffic is seen on a street in central Cairo. Photo: Asharq Al-Awsat
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IMF: Egypt Staff Mission May Lead to $1.6 Billion Disbursement this Summer

Traffic is seen on a street in central Cairo. Photo: Asharq Al-Awsat
Traffic is seen on a street in central Cairo. Photo: Asharq Al-Awsat

The International Monetary Fund said on Thursday that a staff mission is currently in Egypt to conduct the latest reviews on the country's Extended Fund Facility and Resilience and Sustainability Trust loan programs, which ⁠will determine a ⁠possible $1.6 billion disbursement.

IMF spokesperson Julie Kozack told a news briefing that if the review mission results ⁠in a staff-level agreement with Egyptian authorities, a board vote on completion of the reviews and the disbursement could take place over the summer months.

But she commended Egyptian authorities on making ⁠decisive policy ⁠actions that have limited the economic impact of the US-Israeli war on Iran, including keeping fiscal pressures in check.

She said that the IMF staff mission will confirm the resiliency of Egyptian growth.

Business

Saudi Property Measures Help Curb Global Inflation Pressures

A food market in Saudi Arabia (SPA)
A food market in Saudi Arabia (SPA)
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Saudi Property Measures Help Curb Global Inflation Pressures

A food market in Saudi Arabia (SPA)
A food market in Saudi Arabia (SPA)

At a time when the global economy is grappling with strong waves of price pressures caused by the Iran war and disruption in the Strait of Hormuz, Saudi Arabia has managed to chart a different course.

Inflation continued to slow, settling at one of the lowest levels globally, supported by stable rents and regulatory measures to balance supply and demand.

The performance reflected the effectiveness of preemptive government measures and fiscal and monetary policies that helped shield the domestic market from the repercussions of geopolitical crises and global supply chain disruptions.

The latest official data showed that annual inflation slowed to 1.7% in April, according to the General Authority for Statistics.

The Ministry of Finance expects inflation in the Kingdom to slow to around 2% in 2026, compared with 2.3% in 2025.

The slowdown was supported by a slower rise in the cost of housing, water, electricity, gas, and other fuels, which increased by 3.8% compared with previous levels.

The stabilization of actual housing rents at 4.8% for the second month in a row also indicates that the market has begun to absorb regulatory measures. This raises an urgent question in economic circles over whether the Kingdom has already entered a phase of sustainable rent containment.

Experts say this stability could pave the way for further declines in the near term, especially after the approval of the executive regulations on fees for vacant properties, which aim to improve the efficiency of the real estate system and achieve a balance between supply and demand.

The fees are expected to increase real estate supply, which would in turn help lower prices and reduce them at the broader level across the Kingdom, strengthening its position as one of the G20 economies most capable of curbing price pressures.

The government has intensified its efforts to lower real estate prices and continues to do so.

This has come under the directives of Crown Prince and Prime Minister Prince Mohammed bin Salman, who ordered a number of measures to address the issue and bring balance to the real estate sector, after the system, particularly in the capital Riyadh, saw a wave of increases in land prices and rents in recent years.

Data details

Prices in the housing, water, electricity, gas, and fuels group, the second most influential category in inflation, slowed to 3.8% year on year in April, compared with 3.9% in March, recording the lowest rate of increase since the start of the year.

Inflation in actual housing rents also stabilized for the second month in a row at 4.8%, also the lowest rate of increase since the start of 2026.

Monthly comparison

On a monthly basis, the Consumer Price Index rose 0.2% compared with March, as prices increased for food and beverages, housing, and energy. In contrast, stable transport prices and declines in some furniture and clothing items helped limit the acceleration in inflation, keeping rates within moderate levels compared with regional and global markets.

Food and beverage prices, the largest group by weight in the consumer price basket, accelerated to 0.6% in April from 0.3% in March, mainly driven by higher food prices.

Transport prices rose 1% year on year, a slowdown from the previous month and the second-lowest rate of increase since the beginning of the year, helping limit the rise in overall inflation.

Real estate experts told Asharq Al-Awsat that government measures affecting the real estate sector would lower prices, which would, in turn, gradually reduce inflation in Saudi Arabia in the coming period. They said the housing, water, electricity, gas, and fuels group carries significant weight in the inflation rate.

Curbing monopoly

Dr. Osama bin Ghanem Al-Obaidy, an adviser and professor of international commercial law, attributed the slowdown to the stabilization of housing rents, especially after the approval of regulations imposing annual fees of up to 5% of the building’s value on vacant properties.

He said the executive regulations would encourage owners to use their vacant properties and put them on the market, increasing supply and lowering rental prices, thereby affecting real estate inflation by creating a balance between supply and demand.

He said the new regulations followed a series of government measures, including fees on undeveloped urban land, regulation of undeveloped plots, a five-year rent freeze, the development of large housing projects, and incentives for developers to increase real estate supply.

These efforts aim to achieve a more sustainable balance between supply and demand, leading to a further reduction in real estate inflation and, subsequently, a decline in the overall inflation rate.

Larger decline in rents

Economic expert Ahmed Al-Shihri said the slowdown in Saudi Arabia’s annual inflation rate was supported by the stabilization of actual housing rents. He said government moves related to the real estate system had helped calm the pace of increases in housing costs.

Al-Shihri said the decline coincided with the approval of the executive regulations for fees on vacant properties, aimed at boosting real estate supply and encouraging owners of unused units to inject them into the market.

He expected the move to contribute to a larger, gradual decline in rental prices in the coming period, once a better balance between supply and demand is achieved. This would ease pressure on rental prices and strengthen the housing market's stability, potentially supporting the continued slowdown in inflation to low levels compared with several regional and global economies.

He said real estate prices are among the groups with the greatest impact on inflation, meaning that a decline in the sector across the Kingdom would help gradually lower the rate in the coming period.

In conclusion, the data and accelerating legislative moves show that the Kingdom is not merely monitoring inflation indicators but is proactively addressing the roots of price challenges, especially in the real estate sector, which directly affects citizens’ quality of life.

With the executive regulations on fees for vacant properties entering into force and integrated with housing programs and increased supply, the Saudi economy appears to be moving steadily toward consolidating a phase of sustainable price stability. This enhances the appeal of the investment environment and supports households’ long-term financial planning.

Business

IMF Says Constructive US-China Dialogue Good for World Economy

The US and Chinese flag at the Great Hall of the People prior to the state dinner of President Donald Trump and Chinese President Xi Jinping on Thursday May 14, 2026, in Beijing. (AP Photo/Mark Schiefelbein)
The US and Chinese flag at the Great Hall of the People prior to the state dinner of President Donald Trump and Chinese President Xi Jinping on Thursday May 14, 2026, in Beijing. (AP Photo/Mark Schiefelbein)
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IMF Says Constructive US-China Dialogue Good for World Economy

The US and Chinese flag at the Great Hall of the People prior to the state dinner of President Donald Trump and Chinese President Xi Jinping on Thursday May 14, 2026, in Beijing. (AP Photo/Mark Schiefelbein)
The US and Chinese flag at the Great Hall of the People prior to the state dinner of President Donald Trump and Chinese President Xi Jinping on Thursday May 14, 2026, in Beijing. (AP Photo/Mark Schiefelbein)

The International Monetary Fund said on Thursday that it welcomes the initial positive dialogue between US President Donald Trump and Chinese President Xi Jinping, adding that reducing tension and uncertainty between the world's ⁠two largest economies ⁠was good for the world.

"It's very important, of course, that the world's two largest economies are engaging ⁠at the highest level," IMF spokesperson Julie Kozack told a news briefing when asked about the Trump-Xi summit's initial outcomes in Beijing.

"We certainly welcome the fact that there's a constructive dialogue between ⁠the ⁠two countries. Anything that is going to help reduce trade tensions and reduce uncertainty is good for both of those large economies, and, of course, good for the global economy as well," Kozack added, according to Reuters.

Kozack also said that that the IMF was paying close attention to the energy shock caused by ⁠the conflict in the Middle East and its implications for ⁠fertilizer shipments.

History showed it took about six months for increases in fertilizer prices to translate into higher food prices, ⁠and ⁠in some cases reduced yields and food security issues, Kozack added.