RIYADH: Saudi Arabia is forecasting real GDP growth of 4.6 percent in 2026, supported by an expected increase in the output of non-oil activities.
In the Ministry of Finance’s pre-budget statement, the projection for 2025 was set at 4.4 percent, in light of the sustained performance of the economy in the first half of the year.
The report said the 2025 forecast “is driven by an estimated 5.0 percent increase in non-oil activities, supported by increased domestic demands and improved employment rates, which contribute to increases in both private consumption and investment, while reinforcing the resilience of economic growth.”
The 2026 GDP forecast puts Saudi Arabia’s growth rate as exceeding the International Monetary Fund’s 3.1 percent projection for the global economy, and ahead of the IMF’s figures for the USA, China, Japan and the euro area.
The Ministry of Finance projectes government revenues at SR1.15 trillion ($305.87 billion), expenditures at SR1.13 trillion, and a deficit of SR166 billion for 2026.
In a statement published on the Ministry of Finance’s X account, Finance Minister Mohammed Al-Jaadan said: “Saudi Arabia seeks to ensure fiscal sustainability, while supporting growth, by committing to maintaining development and social spending priorities, and ensuring that structural reforms that enhance economic and finanancial efficiency and sustainability are moving forward.”
According to the ministry, the deficit represents a 63 percent increase from 2025 budgeted shortfall, largely attributed to a rise in preliminary expenditure projections by 2 percent compared with the previous year, reflecting higher capital spending, and 3 percent lower revenues than 2025 budget.
These estimates are based on a baseline scenario positioned between low and high and developed to address the challenges and geopolitical risks impacting the global economy.
This deficit, equivalent to 3.3 percent of gross domestic product, is considered expected and is anticipated to persist over the medium term due to ongoing expansionary spending policies.
Starting in 2024, the government deliberately shifted to a voluntary deficit stance as part of its fiscal policy, allowing higher spending to accelerate the rollout of Vision 2030 projects.
This intentional use of deficit financing was designed to speed up implementation of strategic investments, support diversification, and stimulate private-sector activity, reflecting an expansionary approach that prioritizes long-term growth over short-term fiscal balance.
The deficit is a policy choice to front-load spending on transformative projects that are expected to generate high future returns.
As the non-oil economy — led by tourism, entertainment, logistics, and technology — becomes the main engine of growth, these investments are positioned to pay back by expanding revenues and reducing reliance on oil over the medium term.
The statement also highlighted how “the positive performance of the domestic economy” has driven improvements in labor market indicators, with the Saudi unemployment rate falling to 6.8 percent in the second quarter of 2025, thereby achieving the Saudi Vision 2030 objective.
The Ministry of Finance forecast a “relatively stable” average Consumer Price Index of approximately 2.3 percent for 2025, adding “inflation is expected to remain at acceptable levels over the medium term, due to the government’s proactive measures and policies.”
