Saudi Arabia’s economy is poised for substantial growth, with its gross domestic product projected to increase from 1.2 percent in 2024 to 3.8 percent in 2025.

The projection by the Organisation for Economic Cooperation and Development comes amid global economic uncertainties, as many advanced economies are expected to face sluggish growth due to escalating trade tensions, geopolitical instability, and inflationary pressures.

This forecast signals a turnaround for the Kingdom, positioning it as one of the fastest-growing economies within the G20 in the coming years. While Saudi Arabia’s GDP growth is expected to moderate slightly to 3.6 percent in 2026, global GDP growth is projected to slow to 3.1 percent in 2025 and 3 percent in 2026.

Stable inflation

The OECD report also forecasts that Saudi Arabia’s inflation will remain low and stable, projected at 1.9 percent in 2025 and 2 percent in 2026. This stands in contrast to the higher inflation rates seen in many major economies, particularly those facing trade-related disruptions and rising labor costs.

The Kingdom’s inflation stability is noteworthy, especially within the context of the OECD’s broader inflation projections. The report highlights that G20 headline inflation is expected to stay at 3.8 percent in 2025 and 3.2 percent in 2026, with core inflation remaining above target in several advanced economies, including the US.

Oil market and OPEC+ production strategy

A key factor driving Saudi Arabia’s economic performance is its oil sector, which continues to be a vital growth pillar despite the country’s ongoing efforts to diversify its economy under Vision 2030.

The OECD report noted that OPEC+ plans to gradually “unwind production curbs” starting in April 2025, a move that could have significant implications for global oil prices.

At the same time, Saudi Arabia’s efforts to boost non-oil revenue sources under Vision 2030—through investments in technology, tourism, and infrastructure—are helping to strengthen economic resilience amid market volatility. However, the OECD also cautioned that geopolitical risks and rising protectionist policies in global trade could disrupt energy markets, potentially leading to price fluctuations.

Global economic outlook

Beyond Saudi Arabia, the OECD painted a complex outlook for the global economy. “The global economy has shown real resilience, with growth remaining steady and inflation trending downward. However, signs of weakness have emerged, driven by heightened policy uncertainty,” said OECD Secretary-General Mathias Cormann.

Global GDP growth is projected to slow from 3.2 percent in 2024 to 3.1 percent in 2025 and 3 percent in 2026, with many advanced economies experiencing lower-than-expected growth due to increased trade barriers, inflationary pressures, and policy uncertainty.

The US economy is expected to see growth slow from 2.8 percent in 2024 to 2.2 percent in 2025 and 1.6 percent in 2026, as higher interest rates and trade tensions dampen investment and consumer spending. Similarly, the eurozone’s economy is projected to grow by just 1 percent in 2025 and 1.2 percent in 2026. China’s economy is also expected to decelerate, with growth slowing from 4.8 percent in 2025 to 4.4 percent in 2026.

Trade fragmentation and geopolitical risks

A key concern highlighted by the OECD is the growing rise of trade barriers and their potential impact on global economic stability. “Increasing trade restrictions will contribute to higher costs for both production and consumption. It remains essential to maintain a well-functioning, rules-based international trading system and keep markets open,” Cormann added.

The US has raised tariffs on imports from China by 20 percentage points, prompting retaliatory actions from China. In addition, higher tariffs on steel, aluminum, and other goods are expected to disrupt supply chains and increase production costs globally.

The OECD warned that such trade fragmentation could slow global growth and push inflation higher, particularly in economies heavily dependent on international trade. The report also noted that if trade tensions escalate further, global GDP could decline by an additional 0.3 percent over the next three years, with particularly severe effects on Canada, Mexico, and key European economies.