The Organization for Economic Cooperation and Development (OECD) projected that Saudi Arabia’s economy will see a significant growth during 2025.
In a recent report, the OECD expected that Saudi Arabia’s gross domestic product (GDP) will increase from 1.2% in 2024 to 3.8% in 2025, despite the global economic challenges.
Inflation Stability
In its Economic Outlook Report for March 2025, the OECD projected that inflation in Saudi Arabia will remain relatively stable at 1.9% in 2025 and 2% in 2026. The Kingdom’s inflation rate is low compared to higher rates projected for many major economies due to trade-related disruptions and higher labor costs.
The stable inflation rate in Saudi Arabia comes in contrast to the OECD’s projections for broader inflation. The report expects G20 headline inflation to fall from 3.8% in 2025 to 3.2% in 2026, while the core inflation will stay above target in many advanced economies, including the US.
Saudi Oil Sector
The Kingdom’s oil sector plays a key role in driving its economic growth. The oil sector remains a key contributor to economic growth despite the ongoing diversification efforts under Vision 2030.
The OECD report pointed to OPEC+ plans to gradually “unwind production curbs” that will start in April 2025, expecting significant implications for this move on global oil prices. Meanwhile, Saudi Arabia’s investments in vital sectors, such as technology, tourism and infrastructure, to boost non-oil revenues in line with Vision 2030, play a key role in bolstering economic resilience against market volatility.
However, the OECD report warned that geopolitical risks and increasing protectionist policies in global trade could have consequences for energy markets, resulting in price fluctuations.
Strong Performance
The OECD projections for Saudi Arabia comes at a time when the world is facing growing economic uncertainties. Rising trade tensions, geopolitical instability, and inflationary pressures threaten a large share of advanced economies with slow growth.
Interim #EconomicOutlook: OECD GDP growth projections for 2025
G20 3.1%
🇮🇳 6.4%
🇮🇩 4.9%
🇨🇳 4.8%
🇷🇺 1.3%
🇧🇷 2.1%
🇹🇷 3.1%
🇪🇸 2.6%
🇺🇸 2.2%
🇰🇷 1.5%
🇲🇽 -1.3%
🇨🇦 0.7%
🇸🇦 3.8%
🇫🇷 0.8%
🇦🇺 1.9%
🇬🇧 1.4%
🇮🇹 0.7%
🇪🇺 1.0%
🇿🇦 1.6%
🇯🇵 1.1%
🇩🇪 0.4%
🇦🇷 5.7%🔗 https://t.co/9XTTLacZqf pic.twitter.com/SM1UWyINwN
— OECD ➡️ Better Policies for Better Lives (@OECD) March 17, 2025
The OECD forecast for Saudi Arabia positions it among the G20 fastest-growing economies in the coming years. While the Kingdom’s GDP is expected to grow to 3.8% in 2025 and 3.6% in 2026, the global GDP growth is expected to slow to 3.1% in 2025 and 3% in 2026. This will be accompanied by higher trade barriers in several G20 economies and increased policy uncertainty pressuring on investment and household spending.
Global Growth Prospects
The report pointed to the substantial risks caused by the increasing geopolitical and policy uncertainties. These risks include the escalation of trade restrictive measures. The US higher tariffs on imports from other countries, and retaliatory measures from the targeted nations, could disrupt supply chains and raise production costs on a global scale.
In the light of this, the OECD report warned that if trade tensions further escalated, the global output could fall by around 0.3% over the next three years, and global inflation could rise by 0.4% per year over the same period. This could significantly impact Mexico, Canada and the US.
