Standard Chartered Global Research said on Tuesday it believes the recent fiscal deficits in Saudi Arabia have not been a setback, but rather a catalyst of structural macroeconomic transformation.
In its latest Global Focus report, SC Global Research expects Saudi policy makers to continue their efforts in diversifying funding sources in 2026, seeking to attract greater foreign direct investment alongside stronger foreign investor participation in domestic debt markets.
The report said increased capital flows are likely to support the Kingdom’s capital market momentum, notably thanks to greater inclusion in leading investment indices.
SC Global Research expects Saudi Arabia to continue delivering robust GDP growth of 4.5% in 2026, outperforming the 3.4% growth rate for the global economy.
It attributed the Kingdom’s economic resilience to sustained momentum in the oil sector.
“The hydrocarbon industry has returned to growth, as OPEC+ eased the production cuts that had been in place since 2023,” it noted.
Meanwhile, the non-oil sector is also expected to grow steadily at 4.5%, driven by investment and consumption, and will continue supporting the economy.
Saudi Arabia is forecasting real GDP growth of 4.6% in 2026, supported by an expected increase in the output of non-oil activities, led by tourism, entertainment, logistics, and technology.
Mazen Bunyan, CEO of Standard Chartered Saudi Arabia, said: “Continued non-oil sector growth will ensure sustained financial stability whilst diversifying growth sources across the Kingdom.”
In its report, SC Global Research forecasts the Kingdom’s public debt-to-GDP to increase to 36% by end-2026, from 26% at end-2024, taking it closer to the Kingdom’s self-imposed 40% ceiling.
Even so, it believes that recent fiscal deficits have not been a setback, but rather a catalyst of structural macroeconomic transformation.
