Fitch affirmed Saudi Arabia's credit rating at 'A+' with a stable outlook, and expects the kingdom's economy to accelerate growth next year, supported by the return of navigation to normal and the gradual opening of megaprojects.

The agency explained that the kingdom's credit rating reflects the strength of its fiscal position and large financial reserves, as government debt ratios and net sovereign external assets are significantly stronger than the averages for 'A' and 'AA' ratings.

The international credit rating agency also forecast a narrowing of Saudi Arabia's fiscal deficit this year, supported by higher oil revenues.

It confirmed that despite geopolitical conditions, Saudi Arabia maintained its economic resilience through the flexibility of non-oil activities and its public finances.

The agency's forecasts indicate real GDP growth in Saudi Arabia of 0.6% this year, before rebounding in 2027.

It is expected to return to a growth rate of 2.9% by 2028.

Fitch said that fiscal reforms that enhance the budget's resilience to oil price volatility are among factors that could lead to a further upgrade of the kingdom's rating.

It pointed out that increasing non-oil revenues or rationalizing spending, while maintaining the overall public sector balance sheet strength, are supporting factors for further improvement.

A prolonged period of oil prices stabilizing at levels significantly higher than the agency's current forecasts would also allow for this, 'which would allow for an improvement in sovereign and external balances'.

According to the agency, continued economic reform, which supports strong non-oil growth and reduces dependence on public spending, strengthens the resilience of the Saudi economy.

Read also: Business confidence in Saudi Arabia rises to highest level since the war

Fitch expects the fiscal deficit to narrow in 2026 thanks to higher oil revenues. Expenditures will also rise, reflecting the impact of the war.

The agency said that flows through the Saudi East-West pipeline maintained oil production during the war, and expects production to increase to meet external demand after the reopening of the Strait of Hormuz and the rebuilding of local inventories.

It also noted that consumer spending held up, while business confidence is growing in Saudi Arabia.

Megaprojects: a new success story for Saudi Arabia

Fitch said: 'The gradual opening of megaprojects, many of which have started initial operations, the proximity of major events, and indications that the Public Investment Fund will keep domestic spending largely unchanged in its new five-year plan will support growth.'

Read also: Saudi Arabia second highest among G20 in 2027 growth and less affected by war

The International Monetary Fund, in its July World Economic Outlook, lowered its forecast for Saudi Arabia's economic growth this year to 1.7%, assuming a longer closure of the Strait of Hormuz compared to previous assumptions.

But for 2027, the Fund expects the Saudi economy to rebound, growing 5.5%, indicating an upward revision of about 0.9 percentage points compared to April's forecasts.

These forecasts make the Saudi economy a candidate for the highest growth in five years, according to an analysis by the Financial Analysis Unit in Al-Eqtisadiah.

Saudi economy poised for best growth in five years in 2027

Saudi economy candidate for growth in 4 years in 2027 - 02 (1)

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Tensions remain

Fitch referred to the agreement between the US and Iran, which allowed a ceasefire and the reopening of the Strait of Hormuz, but said that recurring tensions highlight the risks to the agreement's sustainability in the near term.

Fitch believes that Iran's nuclear program and capabilities 'will remain a source of tension in its relations with the United States and Israel,' and that further US or Israeli military action against Iran is still very likely.

However, it noted that it is unclear whether such actions would lead to a repeat of the recent escalation in regional conflict.

IMF also raises its forecasts for Saudi growth next year

IMF lowers its forecasts - 02

Fitch expects that the reopening of the strait will return the oil market to a state of oversupply, leading to a decline in the average price of Brent crude to $60 per barrel in 2028 from $87 in 2026.