An International Monetary Fund staff team issued its concluding statement for the 2026 Article IV consultation with Saudi Arabia, saying the economy entered 2026 from a strong position but that conflict-related disruption to shipping through the Strait of Hormuz has weighed on trade and will leave growth notably lower this year. Assuming maritime traffic normalizes in the coming months, the mission projects growth of about 2 percent in 2026 and average inflation of about 2.3 percent, with higher oil prices partly offsetting lost volumes and reducing the current account and fiscal deficits. The statement notes that GDP grew 4.5 percent in 2025 as OPEC+ production cuts unwound and non-oil activity remained robust, while inflation fell below 2 percent. Rerouting through the East-West pipeline and Red Sea ports, together with Aramco’s overseas inventories, helped limit the drop in oil deliveries, and low government debt, ample reserves and a large sovereign wealth fund provide buffers. The main downside risk is a further escalation that impairs shipping routes, damages energy infrastructure and heightens financial sector risks. The mission backed a modest reduction in the non-oil primary deficit in 2026 through spending reprioritization, while saying Saudi Arabia has room to loosen fiscal policy if the shock proves more prolonged, with any support to businesses and households kept temporary, targeted and transparent. On monetary and financial policy, it said the U.S. dollar peg remains a credible anchor and supported the Saudi Central Bank’s enhanced monitoring of liquidity, credit conditions and asset quality, implementation of a 100 basis point countercyclical capital buffer, and further work on foreign exchange borrowing, resolution and emergency liquidity assistance frameworks. The mission’s report will be submitted to the IMF Executive Board for discussion in July 2026.
International Monetary Fund2026-06-03
International Monetary Fund staff says Saudi Arabia can absorb Strait of Hormuz disruption but sees 2026 growth at about 2 percent
IMF staff, in its concluding statement for the 2026 Article IV consultation with Saudi Arabia, said conflict-related disruption to shipping through the Strait of Hormuz is weighing on trade and will lower growth in 2026. Assuming maritime traffic normalizes, it projects growth of about 2 percent and inflation of about 2.3 percent, and supports a modest reduction in the non-oil primary deficit via spending reprioritization while preserving scope for temporary, targeted fiscal support. It considers the U.S. dollar peg a credible anchor and backs the Saudi Central Bank’s enhanced monitoring of liquidity, credit and asset quality, the 100 basis point countercyclical capital buffer, and further work on foreign exchange borrowing and emergency liquidity assistance frameworks.