RIYADH: Saudi Arabia’s economy is projected to regain momentum in 2027, with growth accelerating to 4.3 percent after easing to 3.2 percent in 2026, supported by a resilient non-oil sector and robust domestic demand.
In its latest Economic Outlook, the Organization for Economic Co-operation and Development said the slowdown is a temporary dip rather than a structural setback. The report added that the pipeline to the Red Sea has provided a crucial buffer for oil flows.
These projections broadly align with the International Monetary Fund’s April forecasts, which put Saudi growth at 3.1 percent in 2026 and identified the Kingdom as among the least affected Gulf economies.
The IMF also raised its 2027 growth forecast to 4.5 percent, assuming energy production and transport normalize in the coming months.
“Real GDP growth is projected to moderate from 4.5 percent in 2025 to 3.2 percent in 2026, before recovering to 4.3 percent in 2027, reflecting the evolving conflict in the Middle East,” the OECD said.
The Paris-based organization noted that oil exports have fallen by about one-third because of shipping constraints in the Gulf, although the impact has been cushioned by Saudi Arabia’s pipeline to the Red Sea.
“Non-oil GDP is expected to remain resilient, supported by higher revenues, strong domestic demand, underpinned by strong labor market conditions, rising labor force participation, and moderating inflation,” the report said.
Saudi Arabia’s economic expansion in 2025 saw the non-oil sector contributing 2.8 percentage points to growth and oil activities adding 1.4 points. Trade, tourism and financial services were among the strongest-performing sectors.
The report said the government has used a substantial budget deficit to frontload infrastructure spending, targeting projects aimed at advancing economic diversification.
The forecast comes as the OECD warned that the Middle East conflict has become the dominant force shaping the global economic outlook, driving up energy prices, disrupting trade routes and weighing on growth worldwide.
The organization expects global GDP growth to slow from 3.4 percent in 2025 to 2.8 percent in 2026 before recovering to 3.1 percent in 2027 under its baseline scenario.
The conflict has disrupted economies across the Gulf, with continued shipping constraints through the Strait of Hormuz cutting regional oil production by 45 percent since February and reducing global oil supply by 13.5 percent between February and April 2026.
“The longer the crisis persists, the greater the chance that shortages begin to impact across a range of supply chains,” the OECD cautioned.
The OECD highlighted that many Asian economies remain among the most vulnerable to the conflict because of their heavy reliance on Middle Eastern energy supplies, while commodity-importing developing economies face mounting pressure from higher fuel and food costs.
For Turkiye, the OECD projected economic growth of 3.1 percent in 2026 and 3.8 percent in 2027.
“Higher energy and commodity prices are depressing domestic demand amid tight financial conditions,” it said.
The organization based its central outlook on a “time-limited disruption scenario,” under which energy prices begin easing from mid-2026, broadly in line with current futures market expectations.
“The vulnerability of our economies to one single chokepoint demonstrates the need for intensifying efforts to strengthen the resilience of supply chains,” wrote OECD Chief Economist Stefano Scarpetta in the report’s editorial, calling for accelerated investment in energy diversification and efficiency.
