Saudi Arabia Estimates 3.6% GDP Deficit in 2027 and 3.6% Contraction in 2026

The pre-budget statement for fiscal year 2027 issued by the Saudi Ministry of Finance estimated expenditures at approximately 1,392 billion riyals and revenues at around 1,202 billion riyals, representing a deficit of nearly 191 billion riyals, or 3.6% of gross domestic product (GDP).

In the same context, the 2026 deficit was estimated at around 245 billion riyals, a significantly higher level than the previous estimate of 165 billion riyals. The expected rise in the deficit reflects pressure on revenues amid continued spending on development projects and programs.

The statement expects real GDP to contract by 3.6% in 2026, driven by a 21.8% decline in oil activities, before rebounding to grow by 12.8% in 2027. The contraction means a real decline in the size of the economy after adjusting for prices, while the return to growth in 2027 is linked to the recovery of oil activities.

These figures are widely monitored because they determine the scale of government spending and private sector projects, as well as the government's need to borrow from domestic and international markets. A higher deficit leads to an increase in government debt issuances, which impacts financing costs available to banks and companies within the Kingdom.

What do these terms mean?

Fiscal Deficit: The difference between government spending and collected revenues when expenditures exceed revenues. Pre-budget Statement: A document issued by the Ministry of Finance prior to budget approval, outlining revenue and expenditure estimates. Gross Domestic Product (GDP): The total value of all goods and services produced by an economy in a specific period. Oil Activities: The sector covering oil and gas extraction and related production.