IMF cuts Middle East growth outlook as war disruptions threaten Saudi Arabia’s economy

Saudi Arabia’s economic growth is expected to slow sharply in 2026 as the war in the Middle East disrupts oil exports, trade and business confidence, with renewed attacks by Yemen’s Houthi rebels adding to the kingdom’s economic challenges.

The International Monetary Fund (IMF) projects that Saudi Arabia’s gross domestic product (GDP) will grow by 1.7 per cent in 2026, down from 4.6 per cent in 2025, before rebounding to 5.5 per cent in 2027.

The forecast reflects the impact of regional conflict and disruptions to energy shipments, although the IMF’s July assessment described the Saudi economy as resilient, supported by diversified oil-export routes and strong financial buffers.

Fresh attacks attributed to the Houthis have also raised security concerns for Saudi Arabia, threatening critical infrastructure and potentially undermining investor confidence in the country’s efforts to diversify its economy beyond oil.