Saudi Arabia's economy has shown resilience amid global uncertainties, according to the International Monetary Fund (IMF). In a recent statement following an Article IV mission, the IMF noted that non-oil economic activities have expanded, inflation remains controlled, and unemployment has reached record-low levels. Despite facing twin deficits due to lower oil proceeds and increased investment-linked imports, Saudi Arabia's external and fiscal buffers are considered ample.
The IMF highlighted the importance of addressing strong credit growth and associated funding pressures to mitigate risks to financial stability. "Given the current heightened global uncertainty, continued efforts on structural reform are essential to sustain non-oil growth and drive economic diversification," the statement said.
In 2024, Saudi Arabia's non-oil real GDP grew by 4.2 percent, driven by private consumption and investment in sectors such as retail, hospitality, and construction. The labor market showed improvement with unemployment for Saudi nationals declining to a record low of 7 percent in 2024. Inflation was contained at 2.3 percent in April 2025.
The current account shifted from a surplus of 2.9 percent of GDP in 2023 to a deficit of 0.5 percent in 2024 due to decreased oil export proceeds and higher machinery imports. The fiscal stance showed slight improvement despite spending overruns increasing the overall fiscal deficit.
Looking ahead, robust domestic demand is expected to continue driving growth despite global uncertainties. Non-oil real GDP growth is projected at 3.4 percent in 2025. The IMF noted that while risks remain mainly on the downside due to potential weaker oil demand and global trade tensions, there is potential for stronger growth if reforms are accelerated.
The IMF emphasized prudent fiscal policy management and welcomed contingency planning by Saudi authorities for safeguarding fiscal sustainability against severe shocks. It also stressed the importance of ongoing structural reforms for sustaining non-oil growth and achieving Vision 2030 objectives.
###