IMF Expects Saudi Arabia Economy to Contract in 2026

11:57 PM EDT, 10/12/2026 (MT Newswires) -- The International Monetary Fund reduced its economic growth forecast for Saudi Arabia in 2026 amid the extended closure of the Strait of Hormuz. The fund now expects the kingdom's gross domestic product to contract 3.3% in 2026, against the previous expectation of 1.7% growth, according to the World Economic Outlook update published Tuesday. IMF noted that Saudi Arabia is "somewhat less affected" by disruptions in the Hormuz Strait, citing its diverse export routes. For 2027, the Saudi Arabian economy is projected to recover, with GDP seen rising 7.9% as the strait reopens. In the IMF's previous outlook, Saudi economic growth was estimated at 5.5% in 2027. Meanwhile, the IMF forecasts Saudi inflation at 1.9% and 2.2% in 2026 and 2027, respectively.