Saudi Arabia: 2025 Article IV Consultation-Press Release; and Staff Report

The 2025 Article IV Consultation discusses that Saudi Arabia’s economy has demonstrated strong resilience to shocks, with non-oil economic activities expanding, inflation contained, and unemployment reaching record-low levels. Despite heightened uncertainty and declining commodity prices, the outlook remains strong with risks to the downside. External and fiscal buffers remain ample, even as current account and fiscal deficits persist over the medium term. The near-term outlook faces downside risks, including weaker oil demand due to global trade tensions, lower government spending, and regional security risks that could dampen investor sentiment. On the upside, higher oil production or additional investments linked to Vision 2030 initiatives would support growth, and oil prices could rise if the global recovery strengthens or in the case of disruptions to the global supply of oil. Given the current heightened global uncertainty, pursuing a countercyclical fiscal stance is crucial. Addressing strong credit is important to mitigate risks to systemic financial stability. At the same time, structural reforms are essential to sustain non-oil growth and drive economic diversification, irrespective of oil price developments.