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Riyad Capital stated that expectations point out that the Saudi economic system is on the verge of a noticeable acceleration in progress charges throughout the years 2025 and 2026. Whereas the non-oil sectors are anticipated to proceed to keep up a robust progress path, oil actions are more likely to witness a major restoration that may contribute to enhancing the general efficiency of the economic system.
The corporate acknowledged in its report that the non-oil sector is anticipated to proceed to realize robust and sustainable progress, as it’s more likely to obtain progress of 4.6% in 2025 and 4.3% in 2026, after attaining a robust progress price of 5.2% in 2024, indicating that this represents an extension of a steady interval of financial enlargement that exceeded 6 years at a price of greater than 4%.
She defined that oil sector exercise is anticipated to develop by 5.3% in 2025, and to speed up to about 6.4% in 2026, indicating that the sector witnessed a noticeable enlargement throughout 2025 following the cancellation of the voluntary manufacturing discount applied in 2023, which allowed for a rise in manufacturing estimated at about a million barrels per day.
She added that in mild of expectations of a surplus provide within the oil market throughout the first half of 2026, OPEC+ determined to keep up manufacturing ranges with out a rise within the first quarter of the yr, with this development more likely to proceed within the second quarter, earlier than contemplating any attainable enlargement throughout the second half of the identical yr.
It anticipated the general financial progress price to rise to 4.3% in 2025, in comparison with 2% recorded within the earlier yr, whereas the Saudi economic system is more likely to preserve a robust progress tempo in 2026 at an anticipated price of 4.4%.
She indicated that the state started to comply with a coverage of gradual monetary management after three years of robust monetary enlargement, as authorities expenditures elevated cumulatively by 32% between 2021 and 2024, and this strategy was mirrored in lowering spending by about 3% throughout the yr 2025 in comparison with the earlier yr.
She identified that this conservative strategy is anticipated to proceed in 2026, and accordingly, a fiscal deficit of 5.2% of GDP is more likely to be recorded throughout 2025, declining to three.5% in 2026.
It’s possible that inflation will proceed its downward path throughout the yr 2026, pushed by the continued decline in lease inflation, which is the issue that has essentially the most affect to this point on value ranges. It is usually anticipated that the typical inflation will attain about 1.9% in 2026, after a mean of two.1% in 2025.
She added that when it comes to financial coverage, the US Federal Reserve is more likely to cut back the federal rate of interest from its present stage of 4% to about 3.25% by the top of subsequent yr, and accordingly, the Saudi Central Financial institution is anticipated to scale back the official repo price and the reverse repo price by the identical quantity.
It is usually possible that the 3-month SIBOR price will decline to about 4.10% by the top of 2026, that’s, a lower of roughly 80-90 foundation factors from its present ranges.
To view the graphical abstract of the Saudi economic system – fourth quarter 2025
