Saudi Arabia's real GDP is expected to contract 3.6% in 2026, largely because of a sharp decline in oil activity, even as the non-oil economy continues to expand, according to the Ministry of Finance's Pre-Budget Statement for 2027.
The Ministry estimates that oil activity will decline by around 21.8% this year, while non-oil activities are expected to grow 3.2%, helping cushion the impact of lower oil output on the wider economy.
Non-oil activity grew 1.8% in the first half of 2026, lifting its contribution to GDP to a record 57.3%, the statement said.
Inflation is expected to average about 2.1% in 2026, while unemployment among Saudi nationals fell to 6.5% in the second quarter.
For 2027, the government estimates total revenues at SAR1.202 trillion ($319.74 billion) and expenditure at SAR1.392 trillion ($370.28 billion), resulting in a projected budget deficit of about SAR190 billion, or 3.6% of GDP.
The deficit is expected to widen in nominal terms over the medium term as the government continues spending on development programmes and strategic projects. Expenditure is projected to reach approximately SAR1.544 trillion by 2029, while revenues are forecast to rise to around SAR1.351 trillion.
The Ministry said the fiscal policy underlying the estimates was designed to support economic growth and continue Vision 2030 projects while maintaining fiscal sustainability.
Economic diversification has also significantly increased the contribution of non-oil revenues to government finances. Non-oil revenues rose from approximately SAR166 billion in 2015 to SAR505 billion in 2025, according to the statement.
The government expects continued economic diversification and reforms to support revenue growth over the medium term, while strengthening the resilience of public finances against economic and geopolitical shocks.
Finance Minister Mohammed Aljadaan said the 2027 estimates needed to be viewed against a global environment marked by continued uncertainty and accelerating geopolitical developments.
He said the government would continue to monitor developments affecting the global economy, supply chains and energy markets and respond through flexible fiscal policies.
Saudi Arabia also plans to continue borrowing in domestic and international markets in 2027 under its medium-term debt strategy. Financing will include bonds, sukuk and loans, alongside alternative financing for projects and infrastructure and funding through export credit agencies.
The Ministry said the borrowing programme would help finance development priorities while maintaining sustainable debt levels and supporting the Kingdom's financial position.
The Pre-Budget Statement also highlighted the continued expansion of the non-oil economy under the Vision 2030 reform programme, which has sought to diversify the economy, improve the business environment and increase the role of the private sector.
The government said the 2027 deficit reflected a deliberate fiscal approach aimed at maintaining spending on strategic priorities through economic cycles while preserving fiscal sustainability and the ability to respond to future shocks.
