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.
