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Riyad Capital expects the Saudi economic growth to accelerate in 2025 and 2026, with non-oil activities maintaining a robust growth trajectory, while oil activities are anticipated to rebound.
“We project continued solid growth for non-oil activities, fostered by a growth-oriented fiscal policy, supported by PIF, with a focus on increased investment spending which will support the non-oil economy in the coming years. After a strong growth rate of 4.8% in 2024, we forecast nonoil activities to expand by 4.1% in 2025 and 4.3% in 2026,” the brokerage wrote in its recent report titled “Saudi Economic Chartbook – Q2 2025”.
Riyad Capital forecasts Saudi crude oil production to expand in the next 15-18 months in order to entirely unwind its voluntary output cuts from 2023.
“We feel particularly vindicated in our view by OPEC's recent decision to accelerate this unwinding process in the months of May and June of this year. As a consequence, we project oil activities to grow by 3.5% in 2025, followed by a growth rate of 5.4% in 2026,” it added.
Accordingly, the Kingdom’s overall economic growth is set to pick up to 3.5% in 2025, before further climbing to 4.2% by 2026 after growing at a 1.8% clip last year.
The brokerage also predicts a moderate inflation hike to 2.5% in 2025, following a 1.7% rise in 2024. For next year, inflation is projected to gradually ease to 2.3%.
“Finally, we expect the US Federal Reserve to stay on a measured rate cut trajectory and forecast rate reductions of 50 basis points in 2025 and in 2026. Accordingly, SAMA is projected to cut its official repo rate and reverse repo rate by the same amount,” it further stated.
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