Standard Chartered Global Research ("SC Global Research") expected Saudi Arabia to continue delivering robust GDP growth of 4.5 percent in 2026, outperforming the 3.4 percent growth rate for the global economy. In its latest Global Focus report, SC Global Research attributes Saudi Arabia's economic resilience to sustained momentum in the oil sector. The hydrocarbon industry has returned to growth, as OPEC+ eased the production cuts that had been in place since 2023. The non-oil sector is also expected to grow steadily at 4.5percent , driven by investment and consumption, and will continue supporting the economy. Mazen Bunyan, CEO of Standard Chartered Saudi Arabia, said: "While the 2026 growth outlook for Saudi Arabia is strong, it comes with elevated downside risks to oil prices, a sector set to make a comeback in the next year. In this context, continued non-oil sector growth will ensure sustained financial stability whilst diversifying growth sources across the Kingdom." Meanwhile, expectations for a continued increase in leverage across sector could pose additional downside risks to growth. Amid projections for twin deficits between 2026 and 2028, SC Global Research forecasts the Kingdom's public debt-to-GDP to increase to 36 percent by end-2026, from 26 percent at end-2024, taking it closer to the Kingdom's self-imposed 40 percent ceiling. Even so, SC Global Research believes that recent fiscal deficits have not been a setback, but rather a catalyst of structural macroeconomic transformation. To further support the economy, SC Global Research expects policy makers to continue their efforts in diversifying funding sources in 2026, seeking to attract greater foreign direct investment alongside stronger foreign investor participation in domestic debt markets. Increased capital flows are likely to support the Kingdom's capital market momentum, notably thanks to greater inclusion in leading investment indices. Turning to the outlook for major economies, SC Global Research raises its US growth forecast for 2026 to 2.3percent (from 1.7percent ), as it expects strong business investment and spending, supported by corporate tax cuts and the race for AI adoption. It also expects the labor market to start to recover in H2-2026 on loose financial conditions and strong domestic demand, and as firms adapt to higher tariff levels. SC Global Research recently raised its 2026 growth forecast for China to 4.6 percentfrom 4.3 percent. Fears that US trade policy would damage China's exports have proved largely unfounded so far, and 2025 growth is on track to reach 4.9 percent. Export growth is likely to moderate in 2026 as front-loading fades, but it should remain supported by the recent US-China trade truce and ongoing diversification of export markets. Risks to trade relations with the US remain high, however, especially in the run-up to the US midterm elections. The Euro-area growth forecast for 2026 has been raised marginally to 1.1 percent from 1 percent due to carryover effects. However, the region's growth prospects are muted given trade pressures – both from US tariffs and increasing competition from China – and the uneven picture across euro-area economies. For Asia, growth in export-oriented economies has held up much better than feared in 2025 thanks to strong front-loading of exports to the US. It is expected that this front-loading activity will fade in 2026, implying less support for growth from the external sector. Political uncertainty may also weigh on growth in some countries, such as Thailand and the Philippines. As a result, Asia is one of the few regions where growth may moderate in 2026 versus 2025. Madhur Jha, Global Economist & Head, Thematic Research, commented: "While the 2026 growth outlook is benign, it comes with elevated risks from multiple sources. Geopolitical risks abound, arising not just from key upcoming elections and ongoing conflicts, but also from the rise of alliances that aim to challenge the US-led world order. He added: "Not all risks are to the downside. AI-related productivity gains might start to filter through faster than currently expected, lifting growth not just in the US and China but also globally. While tariffs are unlikely to be lowered further, global trade growth could remain resilient as the diversification of trade partners allows other economies to gain a bigger share of trade-related economic gains."
