“Allianz Research” expects the Saudi economy to grow by 4.3% in 2025

Allianz Research revealed its expectation of the Saudi economy to grow by 4.3% in 2025, and by 4.1% in 2026, indicating that the Saudi economy is among the least risky economies in the region in terms of debt and liquidity, so that Allianz joins institutions and credit rating agencies that have placed the growth of the Saudi economy above 4% during the next two years, supported by the growth of the non-oil sector, in an indication of the strength of the momentum witnessed by the economy while continuing to reap the fruits of the programs and policies of the Kingdom’s Vision 2030.

According to the report issued by the company and titled “Economic Forecasts 2025-2026: Defying Gravity”, the expectations for the growth of the Saudi economy came above the global average at 2.8% in 2025 and 2026, and it also came above the average expected growth for the Middle East region at 3% for 2025 and 3.2% for 2026.

Allianz Research’s forecast for Saudi economic growth is lower than the forecast issued by the International Monetary Fund last October and the Saudi Ministry of Finance, which came in at 4.6% for 2025, and lower than Standard & Poor’s forecast last month, which came in at 4.7% for 2025, but higher than the agency’s forecast for 2026 at 4%.

Allianz Research expects the average annual inflation rate in the Kingdom to be 2.3% in 2025 and 2.1% in 2026, higher than Standard & Poor’s forecast of 1.8% in 2025 and 1.7% in 2026, and also higher than the Saudi Ministry of Finance’s forecast of 1.9% during 2025 and 2026, and also higher than the International Monetary Fund’s forecast of 1.9% in 2025.

Globally, the report expects global economic growth to remain moderate. It is stable at 2.8% in 2025 and 2026, confirming the expectation that advanced economies will witness a slight slowdown at 1.8% in 2025 and 1.7% in 2026, while emerging economies are likely to maintain strong growth at 4.1%. The report expected the US economy to grow by 2.3% in 2025, then slow to 1.8% in 2026. It expected the eurozone to grow by 1.2% in 2025 and 1.5% in 2026. It expected China’s growth to slow from 4.6% in 2025 to 4.2% in 2026 as the transition to a more consumption-based economy continues and foreign trade pressures are managed. The report explained that political changes resulting from the results of the US elections could reshape the economic landscape and lead to uncertainty about global economic growth, noting that geopolitical risks, including tensions between major powers, remain a major concern for global stability.

In the Middle East, the report expected that the tougher US stance towards Iran would slow growth and raise oil prices.

The report expected that a potential trade war by the second quarter of 2025, as a result of US tariffs rising to 60% for China and 10% for others, would increase inflation in the United States and weaken global growth, expecting that significant reductions in immigration to the United States would strain labor markets in key sectors and add inflationary pressures, noting that challenges to the independence of the Federal Reserve, including potential currency interventions, would significantly increase financial risks.

Allianz also expected global inflation to decline to 2% in 2025, allowing monetary policy easing to continue until the end of 2025, but there are still risks from the implementation of potential tariffs in the United States, trade retaliation measures and ongoing conflicts that will lead to higher transportation costs and temporarily increase inflation. It expected the US Federal Reserve, the Bank of England and the European Central Bank to cut interest rates to 3.5%, 3.25% and 2% by the end of 2026. It expected emerging markets to witness cautious monetary easing, with the exception of countries such as Brazil, which may face interest rate increases.