IMF Executive Directors: The Kingdom’s Reform Momentum Is “Impressive”… Three Drivers Are Driving Growth Acceleration This Year

The Executive Directors of the International Monetary Fund (IMF) today agreed with the Fund’s staff assessment of the Saudi economy, commending its strong performance despite heightened global uncertainty and external shocks, thanks to the reforms underway under the Kingdom’s Vision 2030 to diversify the economy. They welcomed the strength of non-oil economic activity, the decline in inflation, and the decline in unemployment to unprecedented levels.

According to the statement issued by the IMF Executive Board on the conclusion of the 2025 Article IV Consultation with Saudi Arabia, the Directors commended the impressive structural reforms undertaken since 2016 and emphasized the importance of maintaining the reform momentum regardless of oil price developments. They particularly welcomed the improvements in the regulatory and business environment, human capital, women’s labor force participation, and governance. The Executive Board attributed its forecast for Saudi economic growth to accelerate to 3.9% this year to three main drivers: continued strong domestic demand, supported by major government projects launched under Saudi Vision 2030 and the hosting of major international events, as well as the ongoing phasing out of oil production cuts under the OPEC+ agreement.

Last week, the International Monetary Fund raised its forecast for Saudi economic growth in 2025 to 3.6%, compared to a previous forecast of 3% (April 2025). It also raised its forecast for 2026 to 3.9%, compared to a previous forecast of 3.7%. This is in light of the continued strong momentum witnessed by the Saudi economy, supported by the non-oil sector.

According to the Fund’s Executive Directors, the outlook remains favorable, supported by appropriate macroeconomic policies, large buffers, and impressive reform momentum. The IMF statement indicated that the Kingdom’s non-oil sector achieved growth of 4.5% in 2024, driven by the retail, hospitality, and construction sectors, amid progress in diversifying economic activity. The Saudi economy has proven its resilience to external shocks.

The IMF Executive Board affirmed that the Kingdom’s reduction in oil production under the OPEC+ agreement to 9 million barrels per day led to a 4.4% decline in oil GDP, declining overall growth to 2%.

The Fund’s directors look forward to continued improvements in access to finance for small and medium-sized enterprises, regional trade integration, and resilience to climate change. Directors noted that industrial policies should remain complementary to structural reforms and be targeted, temporary, and transparent. They also noted that priority should continue to be given to attracting private sector investment and advancing economic diversification. The welcome by IMF experts and directors of the Saudi economy and the raised growth forecasts reflect the continued improvement in the performance of the non-oil sector and the ability to overcome the turmoil that has cast a shadow over all the region’s economies. This is a result of reaping the fruits of the progress made in implementing the programs and policies of the Kingdom’s Vision 2030.