Saudi Arabia is anticipating a significant rebound in its economy, predicting a real GDP growth of 12.8% by 2027. This optimism follows an expected contraction of 3.6% in 2026, largely attributed to a reduction in oil production. Reports suggest a preliminary budget for 2027 reflecting a deficit of 3.6% of GDP, underscoring the challenges ahead while also pointing towards a strategy aimed at sustainable growth.
Projected Government Spending and Revenue
The Saudi government’s expenditure for 2027 is projected to reach approximately 1.392 trillion Saudi riyals (around $371 billion). Anticipated revenue for the same year is expected to be 1.202 trillion riyals ($320.5 billion), leading to a projected deficit of about 190 billion riyals ($50.5 billion). Despite the deficit, the government is committed to high levels of investment, focusing on diversifying its economic growth and gradually managing the deficit over the coming years.
Revenue Projections for 2027-2029
The fiscal plan from 2027 to 2029 outlines three possible revenue scenarios. Regardless of the scenario, the annual expenditure is expected to remain stable at around 1.392 trillion riyals. Under a baseline estimate, total revenue could be around 1.202 trillion riyals, resulting in a deficit of roughly 191 billion riyals. Should revenues exceed expectations, they might reach 1.261 trillion riyals, reducing the deficit to around 132 billion. Conversely, if revenues fall short, estimates suggest a decline to 1.134 trillion riyals, inflating the deficit to about 259 billion.
According to Abdullah Almir, an economics expert from King Fahd University of Petroleum and Minerals, the maintenance of robust spending amid a deficit indicates a drive toward bolstering economic growth and implementing structural changes. He estimates that Saudi Arabia’s total public debt accounts for about 30–33% of GDP, a relatively sustainable level as the nation navigates economic challenges.
Growth in Non-Oil Revenue Streams
A notable shift has been observed in Saudi Arabia’s revenue structure, particularly in the non-oil sector. Non-oil revenue contributed approximately 17% to the country’s total spending in 2015, while projections for 2025 indicate that this portion will rise to 36%. Financial advisor Hussein Alattas highlights that non-oil revenue has grown impressively, from around 166 billion riyals in 2015 to an anticipated 505 billion riyals by 2025.
This increase in non-oil revenue can largely be linked to the growth of the private sector and significant investments across various segments, including infrastructure, tourism, digital transformation, industry, and technology. Nevertheless, oil remains a critical element of the kingdom’s economy, contributing substantially to budgetary revenues and export income, making public finances susceptible to fluctuations in oil prices and production output.
As Saudi Arabia evolves its economic landscape, the focus on diversification and sustainable growth is paramount. The country is striving to mitigate its dependence on oil while fostering new avenues of revenue, paving the way for a more resilient economy in the years ahead.