Saudi Arabia, MENA region to grow faster than expected, IMF says 

The Middle East and North Africa will grow at 3.2% this year, the International Monetary Fund said this week, as it raised its growth forecasts for the region. 

The IMF’s July World Economic Outlook report hiked the MENA region’s 2025 GDP forecast by 0.6 percent from its April projection. It expects the country to grow 3.4% next year, at a par with its April forecast. 

Saudi Arabia is expected to grow 3.6% in 2025 and 3.9% next year, up 0.6% and 0.2% respectively, from the fund’s April projection. This reflects the kingdom’s implementation of its Vision 2030 projects as well as its strong credit growth, which would help undergird domestic demand and mitigate the impact of lower oi prices. 

The kingdom’s oil economy is expected to grow at 4% this year, and accelerate to 4.9% in 2026, while its non-oil GDP will expand by 3.4% in 2025 and hike marginally to 3.5% next year, according to the fund.  

“The direct impact of rising global trade tensions remains limited, as oil products - currently about 78 percent of Saudi Arabia’s goods exports to the U.S - are exempt from US tariffs, while non-oil exports to the US only account for 3.4% of Saudi Arabia’s total non-oil exports,” the Washington-based fund said in its latest Article IV consultation with the kingdom. 

Saudi Arabia plays a momentous role in the regional and global economic context, constituting half of the GCC’s economy. It is also the world’s second largest sender of remittances, with $45.7 billion in outflows in 2024, equalling around 5% of global remittances. 

However, investment-linked imports and remittance outflows are expected to widen the country’s current account deficit which will peak at about 3.4% of GDP by 2027 before lowering to around 3.2% of GDP by the end of the decade. 

“The deficit will be increasingly financed through deposit drawdowns, less FX asset accumulation abroad, and higher external borrowing.” 

The fund has also revised global growth to 3% for 2025, 0.2% higher than in the reference forecast of its April report. The world’s economy is expected to expand 3.1% next year, a marginal revision from its April forecast. 

“This reflects front-loading ahead of tariffs, lower effective tariff rates, better financial conditions, and fiscal expansion in some major jurisdictions,” the fund said in its July report. 

Meanwhile, global headline inflation is expected to fall to 4.2% in 2025 and 3.6% in 2026, a path similar to the one projected in April.