Saudi economy proves resilient to global shocks: IMF

Saudi Arabia’s economy has shown strong resilience to global economic shocks, with non-oil activity expanding, inflation contained, and unemployment falling to a historic low, the International Monetary Fund (IMF) said in its 2025 Article IV Concluding Statement. These developments are in line with the targets of Vision 2030, the Ministry of Finance said.

IMF staff praised the government’s efforts to strengthen the sustainability and resilience of public finances. Despite elevated global uncertainty, strong domestic demand continues to support economic growth, reflecting ongoing implementation of Vision 2030 projects through public and private investment and buoyed by robust credit growth.

Inflation remained contained, edging up slightly to 2.3% in April 2025, with expectations that it will stay anchored around 2%.

The IMF attributed price stability to the credible SAR-US dollar peg, continued domestic subsidies, declining transport and communication costs, and a sustained slowdown in housing rent inflation. Imported inflation linked to higher global tariffs is expected to remain under control.

The IMF commended the Saudi Central Bank (SAMA) for enhancing its liquidity management framework and welcomed its ongoing efforts to strengthen regulatory and supervisory frameworks, which are key to preserving financial stability.

The statement reviewed structural reforms undertaken since 2016. New legislation that came into effect in 2025, including the updated Investment Law, amendments to the Labor Law, and the new Commercial Registration Law, is expected to boost contractual certainty, improve the business environment, raise investor confidence, and support productivity gains.

The IMF emphasized the importance of sustaining reform momentum regardless of oil price trends. Strengthening fiscal institutions and prioritizing the medium-term fiscal framework are seen as essential to achieving Vision 2030 goals.

Over the medium term, non-oil growth is expected to reach around 4% in 2027, supported by strong domestic demand ahead of large-scale international events, before stabilizing at 3.5% by 2030.

With the planned phase-out of OPEC+ production cuts, total gross domestic product (GDP) growth is projected to accelerate to 3.5% in 2025 and 3.9% in 2026, before settling around 3.3% thereafter.

The statement also noted that the banking sector remains resilient, with a capital adequacy ratio of 19.6% at the end of 2024. Despite higher funding costs, bank profitability remains strong, with average return on assets at 2.2% and non-performing loans at their lowest level since 2016.

The concluding statement summarizes the IMF staff’s preliminary findings following its official Article IV mission. These consultations are conducted annually under the IMF’s Articles of Agreement and form part of its broader economic surveillance framework.