The International Monetary Fund (IMF) has stated that Saudi Arabia's economy is demonstrating resilience despite ongoing regional conflicts. According to an IMF team that visited the Kingdom from late April to mid-May, the country's strong fundamentals, including low government debt, ample foreign reserves, and a large sovereign wealth fund, have provided crucial buffers against economic shocks.
Impact of Conflict and Mitigation Measures
The conflict in the Middle East has disrupted maritime traffic through the Strait of Hormuz. However, quick action by Saudi authorities to reroute oil shipments via the East-West pipeline and Red Sea ports, combined with Aramco's overseas inventories, helped limit the impact on oil deliveries. The IMF expects the Saudi economy to grow around 2 percent this year, assuming shipping through the Strait of Hormuz normalizes in the coming months.
Economic Performance and Outlook
The Kingdom entered 2026 on a strong footing, having posted GDP growth of 4.5 percent in 2025, driven by the unwinding of OPEC+ production cuts and solid domestic demand. Inflation had eased to below 2 percent heading into the year. High-frequency data already points to a stabilization in non-oil activity in April after a likely contraction in March, indicating the economy is finding its footing. While lower production volumes may weigh on growth, higher oil prices are expected to partially mitigate the impact.
Azim Sadikov, who led the IMF mission, commented: "The Saudi economy is demonstrating agility and resilience, supported by robust and diversified infrastructure and the authorities' concerted efforts to redirect shipments and ease logistical bottlenecks."
Banking Sector and Long-Term Reforms
The IMF also noted that the Kingdom's banking sector remains well-positioned to absorb potential shocks, backed by robust capital and liquidity levels. The fund pointed to the longer-term benefits of Vision 2030, saying the reform program has, over the past decade, strengthened institutions, improved governance and policymaking, and helped diversify the economy away from oil.
"Sustaining the reform momentum to remove remaining impediments to diversification and to expand the role of the private sector will be key to maintaining strong growth prospects for the medium term," Sadikov added.
Public Investment Fund and Future Drivers
The IMF welcomed a recalibrated strategy from the Public Investment Fund, which is shifting toward more selective capital allocation and greater private-sector involvement. It added that maintaining growth momentum will require continued reforms to strengthen the business environment, further develop capital markets, support SMEs, and accelerate AI adoption, which it identified as key drivers of medium-term economic expansion.
