Arab Monetary Fund: The Saudi economy has proven a high capacity for resilience

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The Director of the Middle East and Central Asia Department at the International Monetary Fund, Jihad Azour, confirmed that the Saudi economy has shown a remarkable ability to confront the repercussions of geopolitical tensions and turmoil that affected energy markets and trade chains in the region, benefiting from the diversity of infrastructure, the flexibility of the economy, and its large reserves.

Azour said in an interview with Al Arabiya Business on the sidelines of the International Monetary Fund and World Bank meetings in Bangkok, that a number of factors enabled the Kingdom to limit the impact of the crisis, most notably the large investments in infrastructure that allowed the diversification of oil export and commodity import routes, in addition to the presence of strategic facilities and installations on the Red Sea that contributed to enhancing the flexibility of supply chains.

He added that the structure of the Saudi economy and the nature of the relationship between the oil and non-oil sectors, in addition to the Kingdom’s possession of reserves and assets outside the Gulf region, all contributed to mitigating the effects of war and regional tensions on the economy.

He pointed out that Saudi Arabia and the UAE also played a pivotal role in maintaining a high degree of stability in the global oil and gas markets during the recent period.

Regarding the International Monetary Fund’s expectations for the Saudi economy, Azour explained that the expected contraction during 2026 is primarily due to the performance of the oil sector, while the non-oil sector continues to show levels of flexibility.

He said that the impact of the slowdown on non-oil activities remains limited, while the oil sector is expected to record negative growth of about 3.4%, which is the main factor behind the overall economic performance during the year.

He added that the Sultanate of Oman was the least affected by the economic repercussions of the crisis at the level of the Gulf states, followed by Saudi Arabia and then the UAE.

Azour pointed out that the Fund’s expectations for the year 2027 are based on the assumption that the negative effects of the regional conflict on trade and economic activity will decline during the first quarter of next year.

He added that the basic scenario assumes a gradual return of production to normal levels by mid-2027, which supports the recovery of economic activity in the region.

He explained that the level of uncertainty is still high, and that geopolitical developments may take different paths, but the Gulf economies have large margins of safety that help them confront shocks.

He stressed that countries such as Saudi Arabia, the Emirates, and Qatar enjoy strong financial reserves, while the Saudi economy has a more diversified economic base and the ability to absorb the effects of crises compared to what was the case in previous periods.

Azour said that the economic reforms and diversification programs implemented by the Kingdom over the past years have strengthened the economy’s resilience and raised its ability to deal with regional and global challenges.