The World Bank to Asharq Al-Awsat: The decline of the “Hormuz” shock will push Saudi Arabia’s growth to 7.9% in 2027

The Saudi economy is heading for a strong rebound in 2027 as the repercussions of the energy and trade disruptions subside. The World Bank expects the Kingdom’s gross domestic product to grow by about 7.9%, and the Saudi economy is heading for a strong rebound in 2027 as the repercussions of the energy and trade disruptions subside. The World Bank expects the Kingdom’s gross domestic product to grow by about 7.9 percent next year, after an expected contraction of about 2 percent during 2026, at a time when the Strait of Hormuz crisis has shown that diversifying sources of growth is no less important than diversifying energy export paths and logistical infrastructure. In an interview with Asharq Al-Awsat on the occasion of the issuance of the latest World Bank report on economic developments in the region, the chief economist for the Middle East, North Africa, Afghanistan and Pakistan at the World Bank, Roberta Gatti, told Asharq Al-Awsat that Saudi Arabia and the UAE were able to overcome the effects of closing the Strait of Hormuz better than some neighboring exporting countries. Thanks to them having alternative ways to export energy.

She explained that Saudi Arabia redirected a large volume of oil exports via the “East-West” pipeline to the Red Sea ports, while the UAE’s ability to export hydrocarbons through Fujairah helped reduce its dependence on the strait. Ghati believes that the crisis has strengthened, rather than weakened, the importance of economic diversification, but at the same time it has revealed another dimension of flexibility, which is the diversification of export paths. In her opinion, the diversification of economic and financial activity across different income sources and sectors must be accompanied by the diversification of trade routes, export infrastructure, and logistics networks. This comes at a time when the World Bank expects the economy of the Middle East, North Africa, Afghanistan and Pakistan region to contract by about 2.1 percent in 2026, compared to a growth of 3.3 percent in 2025, while the economies of the Gulf Cooperation Council countries collectively are heading towards a contraction of 4.3 percent, in one of the most severe shocks to which the region has been exposed since the “Covid-19” pandemic.

On the other hand, the World Bank expects regional growth to rebound strongly to 7.8 percent in 2027, if the conflict recedes and trade and export flows gradually return to normal, driven mainly by the restoration of production and export of hydrocarbons. Ghati says that the conflict demonstrated a set of strengths that strengthened the ability of the Saudi economy to absorb the shock, most notably the large financial reserves, the continuation of economic diversification efforts, and the ability to redirect an important part of oil exports through the Red Sea ports. These factors contributed to maintaining a degree of resilience to disruptions in trade and energy flows, compared to what the repercussions would have been in the absence of these alternatives.