IMF revises 2025 Saudi growth upwards to 3.5% on easing Opec+ output cuts

Kingdom supporting several industries to generate employment and help non-oil economy grow

Office buildings at Al Raidah Digital City in Riaydh. Saudi Arabia's non-oil economy is projected to expand 3.4 per cent in 2025. AFP

The International Monetary Fund has revised Saudi Arabia’s economic growth upwards amid the unwinding of production cuts by Opec+ members.

The Arab world’s largest economy is forecast to grow 3.5 per cent this year, up from a previous projection of 3 per cent in April, and 3.9 per cent in 2026, an upward revision of 0.2 percentage points from the last prediction.

“Saudi Arabia’s economy has demonstrated strong resilience to shocks, with non-oil economic activities expanding, inflation contained, and unemployment reaching record-low levels,” the IMF said on Thursday.

Saudi Arabia is focusing on diversifying its economy away from oil with an emphasis on the development of sectors such as technology, property, tourism and infrastructure as part of Vision 2030.

The kingdom is supporting the development of several industries spanning different sectors to generate employment and help its non-oil economy to grow.

The country's non-oil economy is expected to grow by 3.4 per cent in 2025, after recording a 4.2 per cent growth last year after “the continued implementation of Vision 2030 projects through public and private investment, as well as strong credit growth, which would help sustain domestic demand and mitigate the impact of lower oil prices”, the Washington-based lender said.

Oil prices have remained volatile amid a number of events including the introduction of tariffs by Donald Trump, US-Iran nuclear talks and the conflict between Iran and Israel that ended earlier this week.

Unwinding of production cuts by Opec+ members including Saudi Arabia and Russia have also been affecting oil prices. Last month, Opec+ agreed to increase its monthly oil output at 411,000 barrels per day for July, following similar levels for May and this month.

“Over the medium term, domestic demand – including momentum ahead of Saudi Arabia’s hosting of large-scale international events – is expected to push non-oil growth closer to 4 per cent in 2027 before stabilising at 3.5 per cent by 2030,” the IMF said.

Saudi Arabia is set to host two major global events, Expo 2030 and Fifa World Cup in 2034.

The direct impact of rising global trade tension amid Trump tariffs is also expected to be limited on Saudi Arabia as oil products – comprising 78 per cent of Saudi Arabia’s goods exports to the US in 2024 – are exempt from US tariffs, while non-oil exports account for only 3.4 per cent of the kingdom’s total non-oil exports, the lender said.

In April, US President Donald Trump levied an import tariff of 10 per cent on all Gulf countries.

Saudi Arabia’s inflation levels would remain lower at around 2 per cent, supported by a credible peg to the US dollar, domestic subsidies, and continued supply of expatriate labour and economic growth, according to the IMF.

The overall fiscal deficit is also expected to narrow in the medium term, driven by spending efficiency measures, it said.