Saudi budget deficit to overshoot government estimates – Jadwa

Saudi Arabia’s budget deficit is projected to narrow to 4.5 percent of GDP in 2026, from an estimated 5.3 percent this year, according to a prominent local investment house.

However, the expected gap next year is likely to remain above the planned 3.3 percent target set in the preliminary budget statement, Jadwa Investment said.

The deficit, if financed through borrowing, is likely to increase the government’s debt to just over one third of GDP, it said.

The government’s midyear economic review estimated the 2025 budget deficit at SAR245 billion ($65 billion), mainly due to lower oil revenue.

The government forecast revenue for 2025 at SAR1.09 trillion and expenditure at SAR1.33 trillion.

The budget deficit is officially forecast at SAR165 billion, or 3.3 percent of GDP, for 2026, with a further narrowing to SAR120 billion in 2027.

According to the Riyadh-based investment manager, the current-account deficit is likely to widen to 3.9 percent of GDP, or $50 billion, in 2025, from 1.3 percent in 2024, driven by softer oil prices, rising imports and worker remittances.

Further reading:

• Saudi Arabia doubles estimate of 2025 budget gap
• Saudi oil revenue rises in ‘big surprise’ for second quarter
• Saudi economy thrives with robust non-oil expansion

In 2026, the current-account shortfall is expected to increase to 4.2 percent of GDP amid continued weakness in oil prices.

Jadwa expects inflation to reach around 2.3 percent by the end of 2025, in line with the government’s projection, as higher food prices offset easing rents.

“We forecast inflation to slow due to slower house rental inflation next year,” Jadwa said.