The International Monetary Fund (IMF) expects the Saudi economy to record strong growth of 7.9 percent in 2027, reflecting a projected recovery in energy production and exports, as well as the gradual restoration of regional trade flows as war-related disruptions ease and the Strait of Hormuz reopens under the report’s baseline scenario. The forecast highlights the Saudi economy’s ability to regain momentum after the pressures caused this year by disruptions to energy production and transportation. Saudi Arabia is expected to benefit from its diversified oil export routes and infrastructure, which allow part of its exports to be shipped via the Red Sea rather than through the Strait of Hormuz. In its October World Economic Outlook, the IMF projected that Saudi Arabia’s economy would contract by 3.3 percent in 2026 before rebounding to 7.9 percent growth in 2027. In its April forecasts, the Fund had expected growth of 3.1 percent in 2026 and 4.5 percent in 2027, reflecting a significant shift in projections due to developments in the conflict and assumptions regarding the resumption of economic activity. Export Infrastructure Supports Economic Resilience Saudi Arabia benefits from alternative oil-export outlets, most notably the East-West Pipeline, which transports crude oil from the Eastern Province to the Red Sea port of Yanbu with a capacity of approximately 7 million barrels per day. The Kingdom aims to raise pipeline capacity to 10 million barrels per day, enhancing the flexibility of its export system in the face of maritime disruptions. These alternatives strengthen Saudi Arabia’s ability to mitigate the impact of shipping interruptions on oil flows. Under the IMF’s forecasts, the gradual recovery of production and exports is expected to support economic activity next year. Gulf Recovery Driven by Rebound in Energy Production The strong growth forecast is not limited to Saudi Arabia. The IMF also expects several Gulf economies to recover sharply in 2027 as production, exports, and logistics services rebound. Projected growth rates for 2027 are Qatar 18.8%, Kuwait 17.1%, Bahrain 13.9%, the United Arab Emirates 7.7% and Oman 2.2%. These forecasts follow severe pressure during 2026, when the IMF expects Kuwait’s economy to contract by 16.7%, Qatar’s economy by 15.6%, Bahrain’s economy by 11.3% and the UAE economy to contract by 3.9%. Meanwhile, Oman is expected to achieve growth of 4.1 percent in 2026. The IMF’s baseline scenario assumes that the Strait of Hormuz will begin reopening in March 2027, with a broad return to pre-war conditions by October 2027. This would allow energy flows, shipping, insurance services, and payment systems to recover gradually. The pace of this recovery remains dependent on the course of the conflict and the stability of maritime navigation. Nevertheless, Saudi Arabia’s diversified export routes provide an important buffer, enhancing the economy’s capacity to absorb shocks and restore growth as regional conditions improve.
