IMF cuts Saudi growth outlook to 3.1% in 2026 on regional conflict spillovers

Saudi Arabia’s economic growth is expected to slow in 2026 before rebounding in 2027, as regional conflict disrupts energy markets and transport routes, the International Monetary Fund (IMF) said on Tuesday.

According to its latest World Economic Outlook, the IMF cut Saudi Arabia’s 2026 growth forecast by 1.4 percentage points from January estimates to 3.1 per cent, citing spillovers from regional instability affecting energy production and trade flows.

It said the impact on Saudi Arabia is relatively milder than in some neighbouring economies, reflecting stronger buffers and more diversified export and logistics channels.

“The contraction of GDP growth for 2026 is therefore more pronounced for Bahrain, Iran, Iraq, Kuwait, and Qatar and less significant for Oman, Saudi Arabia, and the United Arab Emirates.” the IMF said.

The Fund raised its 2027 forecast for Saudi Arabia by 0.9 percentage point to 4.5 per cent, assuming normalisation of energy production and transport infrastructure following the conflict.

“For all these economies, growth in 2027 is expected to rebound, based on the assumption that energy production and transportation are normalised over the next few months—an assumption that may need to be revised if the duration of the conflict extends and the degree of damage suffered gets reassessed.”

The IMF said the outlook remains sensitive to developments in regional security conditions and potential disruptions to energy and shipping routes, particularly if the conflict persists or widens.

Attribution: Amwal Al Ghad English