Saudi Arabia enters a new phase described as one of the most sensitive and influential in the course of its economic transformation, according to the International Monetary Fund (IMF), which said next year will be pivotal for the Kingdom thanks to deeper reforms implemented throughout the past years.<\/p>\n\n\n\n
In a \u201ccountry focus\u201d released last month, Amine Mati and Yuan \u201cMonica\u201d Gao Rollinson, both in the IMF\u2019s Middle East and Central Asia Department, showed that growth in Saudi Arabia has been fueled not only by investment, but also by people as private sector job creation has surged, particularly among women while unemployment rates reached record-lows.<\/p>\n\n\n\n
The two economists said the resilience shown in 2025 underscores the progress already achieved in reducing the economy\u2019s exposure to oil fluctuations.<\/p>\n\n\n\n
They said that despite oil prices falling nearly 30% below their 2022 peak, the non-oil economy maintained strong momentum.<\/p>\n\n\n\n
\u201cThis strength reflects the impact of Saudi Vision 2030 reforms\u2014diversification gaps with emerging markets have narrowed, and the business environment now rivals that of advanced economies,\u201d the two IMF experts said.<\/p>\n\n\n\n
At the same time, Saudi Arabia is strategically shifting some of its spending priorities, with some of its investment focus moving toward AI and advanced technologies as part of its broader effort to diversify the economy.<\/p>\n\n\n\n
The IMF paper said deeper reforms\u2014including the steadfast implementation of recently enacted laws that ease access for foreign investors\u2014 will help foster an investor-friendly business environment and attract more private investment.<\/p>\n\n\n\n
At the banking sector, it noted that the Saudi Central Bank\u2019s continued vigilance in monitoring emerging risks will be critical in preventing vulnerabilities from building up.<\/p>\n\n\n\n
\u201cAs conditions evolve, the central bank should continue to proactively deploy prudential measures to keep the financial system resilient,\u201d it said.<\/p>\n\n\n\n
Over time, deepening capital markets\u2014so that companies can raise more financing through bonds and equity\u2014will help ease pressure on banks, facilitate credit for small and medium enterprises, and create a more balanced mix of funding for the economy.<\/p>\n\n\n\n
Looking ahead, Saudi Arabia faces a new test: how to sustain reform momentum in an era of potentially lower oil revenues without slipping back into the stop-and-go cycles that followed past oil booms, the two IMF economists said.<\/p>\n\n\n\n
They said, fortunately, Saudi Arabia approaches this challenge from a position of relative strength thanks to public debt-to-GDP ratios that remain low while foreign assets are still ample.<\/p>\n\n\n\n
At the same time, the IMF noted that the sustainability of such progress relies on Saudi Arabia\u2019s ability to anchor spending decisions within a consistent, multi-year framework will be vital for maintaining long-term sustainability.<\/p>\n\n\n\n
The Fund showed that sustaining Saudi Arabia\u2019s growth momentum will increasingly depend on two engines: a skilled workforce and a vibrant private sector.<\/p>\n\n\n\n
Deeper reforms\u2014including the steadfast implementation of recently enacted laws that ease access for foreign investors\u2014 will help foster an investor-friendly business environment and attract more private investment.<\/p>\n\n\n\n
\u201cThe sovereign wealth fund can act as a complementary catalyst here by spurring new projects and partnerships, while making sure it leaves ample room for both domestic and international private investors to thrive,\u201d the IMF paper noted.<\/p>\n\n\n\n
Last October, the IMF had raised Saudi Arabia’s economic growth forecast to 4% for 2026, supported by the expansion of non-oil activities and higher oil prices.<\/p>\n\n\n\n
Meanwhile, the Saudi Finance Ministry forecasted real GDP growth of 4.6% in 2026, driven by non-oil activities and private-sector leadership.<\/p>\n","protected":false},"excerpt":{"rendered":"
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