The International Monetary Fund (IMF) has praised the remarkable progress made by the Saudi economy in its structural and economic reform path, which has enabled it to overcome challenges related to oil prices and geopolitical tensions.
Saudi Crown Prince and Prime Minister Mohammed bin Salman recently stated that the previous phase demonstrated the ability of both the public and private sectors to confront challenges and quickly adapt to changing circumstances.
He also noted that the quality of government performance played a prominent role in absorbing economic shocks.
The Crown Prince pointed out that the Saudi economy is continuing to diversify its resources and reinforce its ability to reduce dependence on oil. For the first time in its history, non-oil activities accounted for 56% of the gross domestic product (GDP).
In remarks at the 22nd Annual Conference of the Saudi Economic Association held in Jeddah, the International Monetary Fund (IMF) mission chief for Saudi Arabia, Amine Mati, said the progress made by the Kingdom is solidifying its position as a diversified and resilient economy in the region.
Speaking during a session titled "IMF's view on the Saudi economy," Mati said Saudi Arabia has issued laws aimed at facilitating the business environment - such as investment, bankruptcy, and commercial transaction laws - which enhance the private sector’s contribution.
The IMF has recently revised upward its forecast for Saudi Arabia’s economic growth in 2025 and 2026, citing expected increases in oil revenues and accelerating growth in non-oil sectors.
In its latest World Economic Outlook update, the IMF now projects Saudi GDP growth at 3.6% in 2025. The Fund also lifted its 2026 projection to 3.9%.
Economic Resilience
Despite multiple shocks, including oil price fluctuations, Mati stressed that Saudi Arabia’s real GDP remained strong, with nominal GDP growth ranging between 4% and 4.5%, driven by non-oil sector growth of 4% or more.
The unemployment rate also reached its lowest level at 6.3%, reflecting the private sector’s ability to support growth and create jobs. Since 2018, the private sector has played a significant role in driving economic expansion. Additionally, inflation remained stable at around 2%.
Mati also pointed out tangible progress in achieving Vision 2030 goals, including surpassing the targeted number of tourists set for 2030, and tripling government revenues.
Oil Impact and Financial Sector
Mati explained that the impact of oil market volatility on the Saudi economy has become less significant than in the past, due to a reduced direct correlation between oil revenues and economic activity, as well as the presence of sufficient financial reserves.
Regarding the banking sector, he noted that the loan-to-deposit ratio had surpassed 100% for the first time since 1993, indicating banks' willingness to expand lending to businesses and the private sector. This situation has prompted banks to diversify their funding sources through external borrowing and various debt instruments.
He also noted that the Saudi Central Bank (SAMA) has taken measures aimed at managing risks associated with short-term capital flows and monitoring the expansion of bank lending.
A Sustainable Future
Mati stressed the importance of continuing structural reforms regardless of oil price fluctuations to ensure sustainable growth. He pointed to significant potential to enhance government revenues through tax reforms and the elimination of non-targeted exemptions.
He also stressed the importance of developing human capital, noting that reforms have significantly increased female participation in the workforce.
Mati added that implementing regulatory reforms - such as the investment law and the civil code - is crucial for increasing investor confidence.
