World Bank forecast Saudi economy to rebound with 7.9% growth in 2027

The World Bank has revised its forecast for the Saudi economy, anticipating a robust 7.9 percent growth in 2027, significantly higher than its previous April estimate of 4.9 percent. This upward adjustment marks a 3 percentage point increase from the earlier projection. Conversely, the bank has reduced its 2026 growth forecast, now expecting a 2 percent contraction in real GDP, a significant drop from its April prediction of 3.1 percent growth – a 5.1 percentage point decline.

The Middle East, North Africa, Afghanistan, and Pakistan Economic update highlights Saudi Arabia's advantageous position due to the East-West pipeline, which has facilitated the redirection of exports to the Red Sea port of Yanbu. The bank attributes the economic impacts of the conflict predominantly to Gulf economies, emphasizing that the severity of the situation varies based on critical factors such as shipping lane disruptions, energy infrastructure damage, and export redirection capabilities.

Globally, the World Bank projects a 4.3 percent GDP contraction for the Gulf Cooperation Council (GCC) countries in 2026, primarily driven by significant drops in hydrocarbon production and exports following the closure of the Strait of Hormuz. Additionally, the closure has adversely affected sectors like tourism, logistics, and aviation.

The bank's 2027 growth forecast for Saudi Arabia, at 7.9 percent, falls short of the Ministry of Finance's 2027 budget projection of 12.8 percent real GDP growth. This projection, when compared to the anticipated 3.6 percent decline this year, underscores the disparity in economic expectations.