Riyad Capital sees faster Saudi economic growth on oil rebound

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The Saudi economy accelerated at a remarkable pace in 2025-2026, driven by strong non-oil growth, with real GDP forecast to rise 4.6% in 2025 and 4.3% in 2026, following a 5.2% hike in 2024, according to Riyad Capital.

If attained, this growth would mark six consecutive years of expansion above the 4% clip, the brokerage stated in its latest Saudi Economic Chartbook.

The Kingdom’s inflation rate is expected to remain relatively low, averaging 2.3% in 2025 and 2.2% in 2026. This should come as the US Federal Reserve is projected to cut interest rates by 100 basis points (bps) through 2026-end, with the Saudi Central Bank (SAMA) likely keeping repo and reverse repo rates unchanged.

Saudi crude output is forecast to return to pre-COVID levels by September 2025, supporting oil-sector growth of 5.3% in 2025 and 5.4% in 2026. This assumes OPEC+ proceeds with its plan to unwind voluntary cuts in Q3 2025, coupled with an upgrade in the group’s oil growth estimates.

Likewise, overall GDP growth is poised to stand at 4.3% in 2025, up from 2% last year, albeit likely to hold at 4.3% in 2026. Meanwhile, the current account surplus is projected to narrow to 3.7% of GDP in 2025, from 5% a year earlier, before slipping further to 3.3% in 2026 on higher oil imports and stronger tourism receipts.

Looking ahead, the Saudi government is anticipated to pursue a more cautious fiscal policy, with public spending set to grow 4% in 2025 and 3% in 2026, while the fiscal deficit is forecast at -3.4% of GDP in 2025 — prior to narrowing slightly to -3% in 2026.

Unemployment is likely to decline to 7.5% in 2025 and 7.0% in 2026 — about 100 bps below current levels.