Saudi Arabia's economy suffered a brief but significant shock during the recent US-Israel conflict with Iran before staging a swift V-shaped recovery, according to an economic adviser. Speaking during a panel discussion at the Future Hospitality Summit in Riyadh, Rima Bhatia, group economic advisor at Gulf International Bank, said it was important to assess the Kingdom’s economy in the context of the recent conflict.
Initial Downturn Proved Temporary
While the economy experienced a sharp initial decline, Bhatia underlined that “surprisingly, this downturn proved to be very temporary.” The Kingdom’s economic outlook continues to be supported by strong non-oil sector growth, rising private-sector investment, and ongoing reforms under Saudi Vision 2030. Despite heightened geopolitical tensions in the region, policymakers and economists have pointed to Saudi Arabia’s diversified growth drivers, expanding tourism sector, and large-scale infrastructure projects as key factors underpinning economic resilience.
PMI Data Confirms Rapid Turnaround
“In its place today, we have V-shaped recovery, highly agile. The PMI (purchasing managers’ index) number tells us how quickly there was this turnaround from where non-oil exports and oil exports were down,” Bhatia said. She added: “We saw the PMI numbers down. There’s been a sharp recovery, and I think the outlook for the Kingdom is certainly looking very positive.”
2026 Growth Forecast of 3.5-4.5%
Bhatia further highlighted that forecasts point to economic growth of between 3.5 percent and 4.5 percent in 2026. “That is a remarkable number, given what we’ve experienced, and of course, a lot will be determined about the trajectory of growth, depending really on where we land with the peace deal, but I think from an overall perspective, it’s looking positive,” she added.
