Analysts to Asharq Al-Awsat: Policy Flexibility Strengthens Saudi Arabia’s Ability to Withstand Shocks

A view of Riyadh’s Financial District from the metro. (SPA)
A view of Riyadh’s Financial District from the metro. (SPA)
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Analysts to Asharq Al-Awsat: Policy Flexibility Strengthens Saudi Arabia’s Ability to Withstand Shocks

A view of Riyadh’s Financial District from the metro. (SPA)
A view of Riyadh’s Financial District from the metro. (SPA)

The International Monetary Fund (IMF) has raised its forecast for Saudi Arabia’s economy, projecting GDP growth of 5.5 percent in 2027, supported by a recovery in both the oil and non-oil sectors and continued strength in consumption and investment.

Economists said the Kingdom’s sound public finances and accelerating non-oil activity have strengthened its ability to sustain growth despite geopolitical challenges.

The IMF had forecast growth slowing to 1.7 percent in 2026 because of the impact of the Middle East conflict and shipping disruptions through the Strait of Hormuz. It expects the economy to regain momentum the following year as economic activity improves and projects under Saudi Vision 2030 continue to advance.

Naif Alghaith, chief economist at Riyad Bank, told Asharq Al-Awsat that the Saudi economy is likely to exceed 5 percent growth in 2027, driven by the continued strength of non-oil activities, which now account for more than half of GDP, supported by domestic demand, investment projects and Vision 2030 programs.

The tourism, construction, services and trade sectors are poised for further growth alongside improving trade and shipping activity and a recovery in oil production and exports, he added.

“These transformations have helped build a more resilient and robust economy capable of absorbing external shocks and maintaining a sustainable growth trajectory,” he remarked.

A more resilient economy

According to Alghaith, the IMF report clearly reflects the strength of the Saudi economy and its high capacity to withstand external shocks.

The Kingdom demonstrated its resilience during recent geopolitical tensions thanks to strong economic fundamentals and advanced infrastructure, he stressed.

Long-term investments in ports and logistics enabled oil and non-oil shipments to be rerouted efficiently, helping maintain trade flows and supply chains, he said.

He added that substantial foreign asset reserves, strategic commodity reserves and Saudi Arabia’s pivotal position in global energy markets have further enhanced the economy’s ability to absorb external shocks.

He further stressed that the continued expansion of non-oil activities and the broader economy despite global challenges reflects the success of economic policies in building a more resilient, robust and adaptable economy.

International confidence

Abdullah Almeer, assistant professor of economics at King Fahd University of Petroleum and Minerals, told Asharq Al-Awsat that the IMF’s projections reflect international confidence in Saudi Arabia’s ability to overcome geopolitical crises.

He said the Saudi economy continues to deliver a remarkable economic transformation despite the expected slowdown in 2026. A rebound to 5.5 percent growth in 2027 would represent “an excellent recovery” given the impact of the war involving Iran and the geopolitical turmoil that has affected the region.

Almeer underlined the importance of diversified export routes, flexible infrastructure and the Kingdom’s financial strength in enhancing economic resilience. He noted that the Saudi Central Bank’s net foreign assets exceed $488 billion, enough to cover 14 months of imports.

The projected growth depends on the recovery of both oil and non-oil activity, continued strength in consumption, increased domestic and foreign investment, and the continued implementation of Vision 2030 megaprojects, he added.

Strong public finances and investment appeal

Commenting on the IMF’s favorable assessment of Saudi Arabia’s fiscal position, Alghaith said the continued strength of public finances and the decline in the non-oil primary deficit reflect the Kingdom’s success in balancing economic growth with fiscal sustainability.

The non-oil primary deficit fell to 23.3 percent of non-oil GDP in 2025 from 24.5 percent in 2024, strengthening the government’s fiscal position and providing greater fiscal space to continue financing priority development projects, he noted.

Almeer remarked that these indicators would bolster the Saudi capital market by strengthening investor confidence and increasing the appeal of Saudi assets.

Strong growth prospects signal economic stability and resilience, encouraging both domestic and foreign investors to expand their investments, he said. Financial markets also tend to perform better as the economic outlook improves and investors’ appetite for higher-return assets increases.

Debt market and IPOs

Almeer went on to say that the development of the domestic debt market and the flexibility of the initial public offering market are helping attract additional investment inflows.

He noted that the inclusion of Saudi riyal-denominated government sukuk in the JPMorgan and Bloomberg indexes reflects the market’s maturity as well as its greater depth and liquidity.

Saudi Arabia has become one of the largest emerging-market bond issuers, strengthening its position in global capital markets and attracting additional foreign investment, he stressed.

The Saudi stock market also enhanced its investment appeal after raising about $4.2 billion through 40 IPOs on the main and parallel markets in 2025, he said.

Sectors poised to benefit

Almeer expects tourism, entertainment, logistics, manufacturing, technology, artificial intelligence and financial services to be among the sectors that will benefit most from the projected growth over the coming years.

He said the massive investments associated with Vision 2030 projects will support economic diversification and increase the private sector’s contribution.

He highlighted several indicators demonstrating the impact of economic reforms, including inflation remaining around 2 percent, women’s labor-force participation rising to 34.5 percent, and Saudi homeownership reaching 66 percent.



World Bank Projects Lebanon Economy to Contract by 6.4% Due to War

People inspect a damaged building after an Israeli airstrike on the village of Ansar, southern Lebanon, 15 August 2026. (EPA)
People inspect a damaged building after an Israeli airstrike on the village of Ansar, southern Lebanon, 15 August 2026. (EPA)
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World Bank Projects Lebanon Economy to Contract by 6.4% Due to War

People inspect a damaged building after an Israeli airstrike on the village of Ansar, southern Lebanon, 15 August 2026. (EPA)
People inspect a damaged building after an Israeli airstrike on the village of Ansar, southern Lebanon, 15 August 2026. (EPA)

The World Bank on Friday projected that Lebanon's economy would contract by 6.4 percent this year, as the latest Israel-Hezbollah war derailed the country's efforts at recovery.

Lebanon has been dealing with an unprecedented financial crisis since 2019 and was still reeling from the 2024 Israel-Hezbollah war when the Iran-backed group drew it into the Middle East conflict by attacking Israel in March.

Israel responded with a heavy air campaign and ground invasion that Lebanese authorities say have killed more than 4,300 people.

Due to the war, "real GDP is projected to contract by 6.4 percent in 2026, reflecting the collapse in tourism, weaker consumption, disrupted supply chains, heightened insecurity, and prolonged displacement," the World Bank said in a report.

Inflation is also expected to rise to 17.5 percent this year, according to the report.

The World Bank said Lebanon's economy had strengthened before the latest conflict, with an estimated real GDP growth of 4.2 percent in 2025, "the fastest since the onset of the 2019 financial crisis".

"Advancing reforms -- particularly on banking sector restructuring and fiscal management -- will be critical to restoring confidence, protecting stability, and mobilizing the financing needed for reconstruction and recovery," Dahlia Khalifa, the World Bank's Middle East director, said.

The international community has been demanding that Lebanese authorities enact financial reforms in order to secure much-needed economic aid.

Last week, parliament passed amendments to a bank resolution law aimed at restructuring troubled banks and addressing the country's banking crisis.

The International Monetary Fund welcomed the law, describing it as "a very good step that reflects Lebanon's commitment to aligning its legislation with the best international practices".

Lebanon has been in discussions with the IMF, which said it would resume its meetings in Beirut next month.


Tunisia Olive Oil Exports Surge 55%, Bringing in $1.6 billion

Tunisian olive oil producer, Mustapha Mtiraoui, displays olives to be pressed at his oil mill in Kairouan, Tunisia February 24, 2024. REUTERS/Jihed Abidellaoui
Tunisian olive oil producer, Mustapha Mtiraoui, displays olives to be pressed at his oil mill in Kairouan, Tunisia February 24, 2024. REUTERS/Jihed Abidellaoui
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Tunisia Olive Oil Exports Surge 55%, Bringing in $1.6 billion

Tunisian olive oil producer, Mustapha Mtiraoui, displays olives to be pressed at his oil mill in Kairouan, Tunisia February 24, 2024. REUTERS/Jihed Abidellaoui
Tunisian olive oil producer, Mustapha Mtiraoui, displays olives to be pressed at his oil mill in Kairouan, Tunisia February 24, 2024. REUTERS/Jihed Abidellaoui

Tunisia's olive oil exports surged 55.3% to a record 368,000 metric tons in the first nine months of the 2025/26 season, bringing in $1.6 billion in export revenue, up 44.4% from a year earlier, official data showed on Friday.

The surge in olive oil shipments, a vital source of foreign currency and Tunisia's top agricultural export, will provide a much-needed boost to the country's finances as the government grapples with persistent economic and fiscal pressure.

The jump in exports was driven by strong global demand during the first nine months of the season, which began in November.

Extra virgin olive oil accounted for 83.6% of total shipments, the National Observatory of Agriculture said, Reuters reported.

The European Union remained the biggest destination, taking 57.1% of Tunisian olive oil exports, while North America accounted for 24%. More than 70 countries imported Tunisian oil during the period.

Exports to other markets included Saudi Arabia, which took 4.6%, Jordan with 3.1% and African markets at 3.8%, with Egypt accounting for 3.3%.

Bottled olive oil exports rose 50.8% to 51,500 tons, but bulk oil still accounted for the vast majority of shipments, underscoring Tunisia's challenge in capturing more value from one of its most important export products.


South African Rand Hits Strongest Level since Start of Iran War

South African Rand coins are seen in this illustration picture taken October 28, 2020. REUTERS/Mike Hutchings/Illustration
South African Rand coins are seen in this illustration picture taken October 28, 2020. REUTERS/Mike Hutchings/Illustration
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South African Rand Hits Strongest Level since Start of Iran War

South African Rand coins are seen in this illustration picture taken October 28, 2020. REUTERS/Mike Hutchings/Illustration
South African Rand coins are seen in this illustration picture taken October 28, 2020. REUTERS/Mike Hutchings/Illustration

The South African rand strengthened on Friday to its strongest level since the United States and Israel launched attacks on Iran on February 28, as rising gold prices and a weaker dollar boosted the commodity-linked currency.

At 1229 GMT, the rand traded at 15.9925 against the dollar , about 0.8% stronger from its previous close.

Gold, one of South Africa's main exports, rose to a more than three-month high on Friday and was on track for a third straight weekly gain.

The precious metal was supported by a weaker dollar and the US Treasury's announcement that it would increase buybacks of longer-dated securities, Reuters reported.

US Treasury Secretary Scott Bessent said he may further increase the government's repurchases of Treasuries. That came after the Treasury said it would double the size of buybacks on longer-dated securities over the next quarter.

The US dollar was set to end a bumpy week lower, making greenback-priced bullion more affordable for buyers overseas.

Like other emerging market currencies, the rand has been at the mercy of global market sentiment, particularly since the start of the Iran war.

On the Johannesburg Stock Exchange, the Top-40 index was last up 2.2%.

South Africa's benchmark 2035 government bond was also firmer in early deals, as the yield fell 0.5 basis points to 8.56%.