The International Monetary Fund (IMF) expects Saudi Arabia’s economy to expand by 5.5 percent in 2027, driven by a recovery in both the oil and non-oil sectors, with consumption and investment remaining the main engines of medium-term growth as the Kingdom continues implementing economic reforms under Vision 2030.
The forecast came at the conclusion of the IMF’s Article IV consultations with Saudi Arabia, approved by the Fund’s Executive Board on July 22, 2026. The IMF said the Saudi economy had demonstrated strong resilience to regional turmoil, supported by low government debt, ample reserves and a diversified investment base led by the Public Investment Fund (PIF).
2027 Growth Outlook
While the IMF expects growth to slow to 1.7 percent in 2026 because of the impact of the war in the Middle East and shipping disruptions through the Strait of Hormuz, it forecasts a strong rebound the following year, with GDP expanding by 5.5 percent as both oil and non-oil activity recover and consumption and investment remain robust.
The report said the resumption of normal maritime traffic, coupled with continued progress on megaprojects and economic reforms, would help restore growth momentum.
Strong Public Finances
The IMF said the Kingdom maintains a strong fiscal position, citing low government debt, ample sovereign reserves and a diversified investment base that has strengthened the economy’s resilience to external shocks.
It noted that the non-oil primary deficit—the IMF’s preferred measure of the Kingdom’s fiscal stance—narrowed to 23.3 percent of non-oil GDP in 2025 from 24.5 percent in 2024.
The report added that the government continues to pursue reforms aimed at strengthening medium-term fiscal sustainability, including modernizing the social insurance system, improving spending efficiency and enhancing the quality of public services. Public debt remains at sustainable levels, while sovereign risks are limited by the strength of the Kingdom’s financial assets.
The IMF also highlighted significant improvements in public spending efficiency over the past two decades, supported by ongoing initiatives led by the Expenditure and Projects Efficiency Authority to strengthen public expenditure management and oversight.
Strong Reserves, Active Debt Markets
Net foreign assets at the Saudi Central Bank stood at $488 billion at the end of May 2026, equivalent to roughly 14 months of import cover, the report said.
The IMF also noted the Kingdom’s growing presence in international capital markets. Bond issuance exceeded $60 billion in 2025, with the government, the Public Investment Fund and Saudi Aramco accounting for more than half the total. Saudi Arabia became the largest bond issuer among emerging markets excluding China and the largest constituent of the JPMorgan Emerging Markets Bond Index Global Diversified, with a weighting of 5.1 percent.
The Fund also praised progress in developing the domestic debt market, noting the inclusion of Saudi riyal-denominated government sukuk in the JPMorgan and Bloomberg bond indexes. It said all public debt, except private placements, is tradable and that the Kingdom continues to enjoy broad access to debt markets.
Capital Market Resilience
The report said Saudi Arabia’s initial public offering market remained resilient despite geopolitical tensions, with companies raising $4.2 billion through 40 IPOs on the main and parallel markets in 2025.
Inflation, Labor Market and Housing
The IMF said inflation remained contained at 2 percent in 2025, supported by fiscal and monetary policies aimed at curbing price pressures.
It added that labor law amendments introduced in 2025 enhanced labor market flexibility and equal opportunity. Saudi women’s labor force participation rose to 34.5 percent from a baseline of 22.8 percent, keeping the Kingdom on track to reach its 40 percent target by 2030.
In the housing sector, the homeownership rate among Saudi nationals increased to 66 percent in 2025 from 47 percent in 2016, moving closer to the Vision 2030 target of 70 percent.
Vision 2030
The IMF said Vision 2030 has driven a decade of economic transformation by strengthening institutional frameworks, improving economic policymaking, reducing reliance on oil, expanding the private sector’s role, and delivering tangible gains in the labor market and social sectors, including healthcare and education. It noted that several Vision 2030 targets have already been achieved ahead of schedule.
The report also said the Public Investment Fund’s 2026-2030 strategy calls for a more selective allocation of capital and greater private-sector participation, alongside a new national privatization strategy designed to boost productivity and increase the private sector’s contribution to the economy.
