Riyad Capital sees Saudi economy up 4.3% in 2026

Riyad Capital expects Saudi Arabia’s economy to grow 4.3% in 2026, supported by balanced oil and non-oil expansion, narrowing fiscal and current account deficits, and easing inflation

Saudi Arabia’s gross domestic product (GDP) growth is projected at 4.3% in 2026, compared with 4.5% in 2025. However, the growth is expected to stabilize at 3.4% in 2027, backed by balanced contributions from both oil and non-oil sectors, according to a recent report for Riyad Capital.

The non-oil sector will maintain solid growth momentum, albeit with greater moderation compared with previous years. The sector recorded growth of 6% in 2024 and 4.9% in 2025 and is expected to expand by 4.3% in 2026 before gradually accelerating to 4.6% in 2027.

The upward trajectory marks an exceptional seven-year phase of sustained non-oil activity growth exceeding 4%, the report added.

Meanwhile, the oil sector strategy of gradual production cuts in 2025 boosted the Kingdom’s production capacity by more than one million barrels per day (bpd).

Despite the speculations of a global supply surplus in 2026, the OPEC+ group decided to suspend any further production increases in Q1. However, they retained the option to resume output expansion in Q2 if the price recovery continued, with the rise likely to be postponed until 2027 when it becomes more significant.

Accordingly, the oil sector is expected to grow by 6.2% in 2026 and 2.2% in 2027.

The report pointed out that the government adopted a fiscal consolidation path in 2025, which is expected to continue in 2026 ahead of a gradual return to fiscal easing by 2027. Thus, the fiscal deficit is estimated to narrow to 4.3% of GDP in 2026, compared with 5.9% in 2025, with further expected contraction to 3.5% in 2027.

The current account balance is also projected to record a deficit of 3.9% of GDP in 2026, compared with 3.5% in 2025, before narrowing to 2.6% in 2027, driven by higher oil export revenue and sustained growth in tourism and travel sector revenue.

Riyad Capital noted that inflation rates are expected to decline gradually in 2026, in line with the anticipated easing in rental price inflation (the main driver of the index). Average inflation is forecast to stabilize at 1.8% in 2026, before edging up to 2% in 2027.

Forecasts indicate that the US Federal Reserve would cut its key interest rate from 3.75% to 3.25% by the end of 2026, with rates likely to remain intact during 2027. The Saudi Central Bank (SAMA) is expected to follow suit.

Riyad Capital expected the three-month Saudi Arabian interbank offered rate (SAIBOR) to decline to 4.2% by the end of 2026, reaching its lowest level slightly above 4% in 2027.

Riyad Capital - Saudi economy (25/2/2026)