São Paulo – Saudi Arabia’s gross domestic product is expected to grow 1.7% this year from 2025, according to estimates released on Wednesday (29) by the International Monetary Fund (IMF).
In its assessment of the Arab country’s economy, the IMF said growth would slow from 4.6% last year due to uncertainty in the Gulf. Even amid the regional conflict, the fund said the Saudi economy has demonstrated agility and resilience thanks to its strong economic fundamentals.
According to the IMF, reduced shipping through the Strait of Hormuz disrupted operations, delayed deliveries and constrained trade. Despite these challenges, Saudi Arabia was able to continue exporting oil through the East-West Pipeline, limiting the decline in shipments. Higher oil prices also offset losses resulting from lower export volumes.
About 20% of the world’s oil and natural gas production, along with other petroleum products, passes through the Strait of Hormuz. Since the conflict involving the United States and Israel against Iran began, shipping through the strait has been virtually halted, disrupting exports from oil-producing countries.
Saudi Arabia, which has part of its coastline on the Gulf, was able to redirect crude through the East-West Pipeline to the Red Sea, from where it continued exports, helping reduce the impact on its economy.
The IMF said economic growth has been driven by domestic demand and the non-oil sector, although it expects the latter to slow this year.
“Activity will continue to be supported by domestic demand, underpinned by stable employment, robust government spending, and the steady execution of capital projects,” the IMF said in its report.
Inflation, which remained below 2% last year, is forecast to rise to 2.2% this year due to higher shipping and insurance costs.
The IMF cautioned, however, that the country’s economic outlook will depend on how the conflict evolves, as further disruptions to shipping through the Strait of Hormuz could weigh on trade, undermine confidence, and hinder economic growth and diversification.
Over the medium term, the fund expects growth to be supported by consumer spending and government-led investment projects under the Kingdom’s Vision 2030 economic diversification plan.
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Translated by Guilherme Miranda
