The Organization for Economic Co-operation and Development (OECD) has projected that Saudi Arabia's economy will regain momentum in 2027, with growth accelerating to 4.3 percent after easing to 3.2 percent in 2026. This recovery is supported by a resilient non-oil sector and robust domestic demand, according to the latest OECD Economic Outlook.
Key Projections and Context
The OECD noted that the slowdown in 2026 is a temporary dip rather than a structural setback. The report highlighted that the pipeline to the Red Sea has provided a crucial buffer for oil flows, mitigating the impact of regional tensions. These projections broadly align with the International Monetary Fund's April forecasts, which placed Saudi growth at 3.1 percent in 2026 and raised its 2027 forecast to 4.5 percent, assuming normalization of energy production and transport.
“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 stated.
Impact of Regional Conflict
The Paris-based organization noted that oil exports have fallen by about one-third due to shipping constraints in the Gulf, although the impact has been cushioned by Saudi Arabia's Red Sea pipeline. The non-oil sector is expected to remain resilient, supported by higher revenues and strong domestic demand, underpinned by robust labor market conditions, rising labor force participation, and moderating inflation.
Saudi Arabia's economic expansion in 2025 saw the non-oil sector contributing 2.8 percentage points to growth, while oil activities added 1.4 points. Trade, tourism, and financial services were among the strongest-performing sectors. The report also indicated that the government has used a substantial budget deficit to frontload infrastructure spending, targeting projects aimed at advancing economic diversification.
Global Economic Outlook
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. Global GDP growth is expected to slow from 3.4 percent in 2025 to 2.8 percent in 2026 before recovering to 3.1 percent in 2027 under the 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.
Vulnerable Economies
The OECD highlighted that many Asian economies remain among the most vulnerable to the conflict due to 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, noting that higher energy and commodity prices are depressing domestic demand amid tight financial conditions.
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, calling for accelerated investment in energy diversification and efficiency.
