Saudi Arabia’s economic outlook received a significant boost this month after the International Monetary Fund (IMF) raised its growth forecast for the Kingdom to 4 percent for both 2025 and 2026.
The revision reflects growing confidence in the region’s largest economy and aligns with upgraded projections from the World Bank and the OECD. Together, these forecasts position Saudi Arabia among the strongest global performers heading into 2026. They also arrive at a moment when cryptocurrencies are expected to play an increasingly influential role in shaping global forex markets, prompting renewed focus on how investors in the Arab region might navigate these changing dynamics.
The wider Forex 2026 outlook captures these shifts and highlights how stronger Gulf economic performance could influence currency markets in the year ahead.
IMF Raises Saudi Growth Forecast
In its latest update, the IMF issued its second upward revision for Saudi Arabia in three months. The Fund now expects the Kingdom to grow by 4 percent in both 2025 and 2026, reflecting increases of 0.4 and 0.1 percentage points over its July estimates. The revision signals confidence in Saudi Arabia’s economic resilience, in the continued expansion of non-oil activities, and in the anticipated easing of oil production cuts under the OPEC+ agreement. The IMF also adjusted its crude price expectations, raising its estimate for the current year to USD 68.9 per barrel from USD 68.2 and lifting its 2026 projection to USD 65.8 from USD 64.3.
The Saudi Ministry of Finance offered an even more positive outlook, projecting 4.4 percent growth this year and 4.6 percent next year. These expectations are driven by strong performance in non-oil sectors, which are expected to grow by roughly 5 percent by the end of 2025, continued expansion in non-oil activities at 3.8 percent, and a strengthening of both oil revenues and non-oil economic momentum.
Moody’s forecasts are closely aligned with government projections. The ratings agency expects real GDP to grow by 4 percent this year and 4.5 percent in 2026. Saudi Arabia’s General Authority for Statistics has already reported real GDP growth of 3.9 percent in the second quarter of 2025.
The IMF’s upgrades have also raised expectations across the Gulf. Growth for GCC economies is now forecast at 3.9 percent in 2025 and 4.3 percent in 2026, up from earlier estimates of 3 percent. The UAE is expected to lead with projected growth of 4.8 percent, followed by Qatar at 2.9 percent, Kuwait at 2.6 percent, and Bahrain and Oman at around 2.9 percent. These varied forecasts underline the region’s economic resilience and its ability to adapt to global volatility. Davey Arora of Daman Investments described Gulf banks as operationally strong, citing disciplined risk management and steady lending growth as key factors supporting their stability.
Inflation across the region is projected to remain low, with the IMF expecting an average of 1.7 percent in 2025. This level of price stability is anticipated to strengthen financial markets and improve investor confidence.
Current account surpluses across the GCC are projected to narrow gradually from 7.1 percent of GDP in 2024 to 4.9 percent in 2025, eventually reaching 3.7 percent by 2030. Forecasts for non-oil GDP growth also improved, rising to 3.8 percent for 2025 from the IMF’s previous estimate of 3.4 percent in May. This growth reflects sustained progress in diversifying GCC economies and reducing reliance on oil revenues.
How the Forecasts Tie into the Global Economy
The IMF’s outlook for Arab markets is closely linked to global economic performance. Central bank decisions, movements in interest rates, and changes in commodity markets all influence currency valuations in the region. With global growth projected at 3.2 percent in 2025 and 3.1 percent in 2026, these developments play a decisive role in shaping regional expectations.
Although Arab economies have limited direct exposure to the United States’ new tariff regime, the IMF still trimmed its regional forecasts by 0.8 percent for 2025 and 2026 due to the expected impact of weaker global commodity demand. Even with this adjustment, Middle Eastern economies have shown considerable resilience, supported by expanding non-oil sectors and relatively limited trade exposure to the United States.
Global indicators such as inflation rates, employment figures, and manufacturing data remain critical tools for forex traders. The IMF expects global inflation to fall from 5.7 percent in 2024 to 4.3 percent in 2025, a decline that is likely to contribute to greater market stability in the Arab region.
A Region with Growing Success
The IMF’s improved forecasts mark an encouraging period for Arab economies, with Saudi Arabia expected to lead growth at 4 percent through 2026. These projections largely reflect the region’s success in accelerating diversification efforts and boosting non-oil sectors, which are expected to grow by about 5 percent by the end of next year.
Differences across Gulf economies are more visible in this outlook. The UAE is expected to record the highest level of growth at 4.8 percent, while Qatar, Kuwait, Bahrain, and Oman are forecast to grow between 2.6 and 2.9 percent. Nonetheless, the region collectively appears to be transitioning toward more stable and resilient economic structures.
The relationship between Arab markets and global economic trends remains central to this momentum. While global growth is expected to moderate slightly, Arab economies have demonstrated their capacity to absorb external shocks and maintain forward momentum. Lower expected inflation at 1.7 percent is also poised to reinforce market confidence.
As 2026 approaches, the Arab region is positioned for a new stage of economic maturity supported by prudent fiscal policies, expanded diversification, and solid domestic demand. For forex markets, these conditions suggest steadier trading patterns, stronger investor confidence, and new opportunities rooted in the region’s strengthening economic foundation.
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