For decades, the central question surrounding oil-based economies has revolved around their ability to decouple gross domestic product growth from the volatility of energy markets. Yet the figures revealed by the latest Bloomberg survey aligned closely with estimates from Saudi Arabia’s Ministry of Finance tell a different story altogether. Today, the Saudi economy is no longer driven by a single engine, but by two engines operating in high synchronization.
The survey, which included 21 economists and raised expectations for Saudi GDP growth to 4.5 percent for both the current and the coming year, represents far more than a marginal statistical adjustment from the previous 4.1 percent forecast. It is, in essence, a vote of confidence by global institutions in the fiscal and monetary policies pursued by Riyadh.
Growth Engines: Oil Recovery Meets Non-Oil Expansion
What stands out in the current economic landscape is what might be called a positive convergence. At a time when oil activity is regaining momentum recording its fastest growth rate in three years non-oil sectors continue to play the role of both safety valve and sustainable growth engine.
Supported by vital sectors such as tourism, industry, and hospitality, this convergence has translated into notable results:
Economic growth accelerated to 4.8 percent year-on-year in the third quarter.
Compared with 4.5 percent in the second quarter and 3.7 percent in the first.
This upward trajectory underscores that the Kingdom is moving steadily toward its strategic growth targets.
Saudi Arabia’s 2026 Budget: Calculated Expansion
How should these projections be interpreted in light of Saudi Arabia’s 2026 budget? The government’s decision to adopt an expansionary budget with expenditures reaching SAR 1.31 trillion (a 2 percent increase), while accepting a projected deficit of SAR 165 billion (3.3 percent of GDP) reflects a stance of calculated boldness.
Rather than prioritizing short-term fiscal austerity, the Kingdom has consciously chosen to sustain strategic spending on major projects and social programs, supporting long-term economic growth. This approach is reinforced by a clear plan to gradually reduce the deficit to:
2.3 percent in 2027
2.2 percent in 2028
Inflation and Interest-Rate Outlook for 2025
The picture is completed by monetary policy expectations, which point to a more attractive investment environment for the private sector in the year ahead:
Inflation: Expected to ease to 1.9 percent next year, down from 2.2 percent in October.
Interest rates: Analysts anticipate a reduction of around 50 basis points by the end of next year.
Together, these factors imply lower financing costs for businesses the real fuel needed to expand operations and deepen the contribution of non-oil sectors to overall GDP.
How International Institutions View the Saudi Economy
Even traditionally cautious international institutions, such as the World Bank, have been compelled to revise their forecasts upward. The Bank has raised its estimate for Saudi economic growth in 2025 to 3.8 percent, up from 3.2 percent previously. This convergence between official projections and international assessments enhances the credibility of the Saudi vision and its capacity to achieve real growth rates of around 4.3 percent in both 2026 and 2027.
Conclusion
Saudi Arabia’s economy in 2025 and 2026 is not betting on chance or on oil prices alone. Rather, it is reaping the results of an economic restructuring that has transformed government spending into investment and fiscal deficits into tools for growth. The outcome is an economic landscape defined by both dynamism and resilience one that reflects a mature transition to a multi-engine growth model.