The International Monetary Fund increased its 2026 growth projections of Saudi Arabia to 4.5 percent in reference to increased oil production rate, strong domestic demand, and ongoing economic reforms throughout the region.
According to the fund’s latest World Economic Outlook Update, the updated forecast represents an increase of 0.5 percentage points over the October forecast of the IMF.
The economy of Saudi Arabia is predicted to have expanded 4.3 percent in the year 2025, and the growth will slow down to 3.6 percent in 2027.
This follows the announcement by the World Bank earlier this month that the gross domestic product of Saudi Arabia will expand by 4.3 percent in 2026 and 4.4 percent in 2027, compared to an estimated 3.8 percent in 2025.
The IMF projects the growth momentum to accumulate in the wider Middle East and North Africa and the Gulf Cooperation Council region.
The IMF said in its latest report, “In the Middle East and Central Asia, growth is projected to accelerate from 3.7 percent in 2025 to 3.9 percent in 2026 and to 4.0 percent in 2027, supported by higher oil output, resilient local demand, and ongoing reforms.”
Likewise, the Middle East and North Africa region will experience growth to increase to 3.4 percent in 2025 to 3.9 percent in 2026 and 4 percent in 2027. The broader report indicated that the global economy has stabilized at 3.3 percent growth in 2026, but this stability has been built on a “narrow base of drivers,” mainly technology investment and fiscal stimulus, which renders growth susceptible.
Among the main risks, there is a possible reassessment of the productivity benefits of artificial intelligence, intensifying trade relations, and geopolitical outbursts.
The IMF stated in its report, “Headwinds from shifting trade policies are offset by tailwinds from surging investment related to technology, including artificial intelligence, more so in North America and Asia than in other regions, as well as fiscal and monetary support, broadly accommodative financial conditions, and adaptability of the private sector.”
In the energy commodities, which represent a significant part of the revenues in the region, the IMF foresees a drop in price by approximately 7 percent in 2026 due to “tepid global demand growth and strong supply growth,” but observed that there is a soft floor supplied by higher cost producers and strategic stockpiling.
Meanwhile, the IMF foresees a further decline in inflation across the world. The global headline inflation is expected to decrease to an estimated 4.1 percent in 2025, to 3.8 percent in 2026, and to 3.4 percent in 2027.
The report stated that “overarching trends of softening demand and lower energy prices” are expected to remain intact. The IMF also gave revised growth projections of other leading economies.
In developed economies, the US is estimated to experience growth of 2.4 percent in the year 2026, whereas the euro area is projected to grow by 1.3 percent during the same year. The growth of Japan is expected to be moderate at 0.7 percent.
Therefore, in the case of major emerging markets, China is expected to grow at 4.5 percent in 2026, and India will grow by 6.4 percent. The IMF offered policy recommendations regarding the re-establishment of a fiscal buffer, the preservation of independence in the central bank, and the minimization of policy uncertainty to create sustainable medium-term growth, a recommendation that is especially pertinent to commodity-exporting areas that are going through energy transition and diversification.
