IMF: Impact of Houthi attacks on Saudi economy still limited

The IMF's regional director stated that the impact of Houthi attacks on the Saudi economy remains limited, thanks to strong domestic demand and the public sector, despite escalating attacks in recent weeks. The Saudi economy is expected to contract by 3.3% this year due to the repercussions of the war.

Jihad Azour, the IMF's regional director, stated that the impact of Houthi attacks on the Saudi economy remains "limited" so far, thanks to strong domestic demand and a solid public sector, although geopolitical uncertainty still poses a threat. These remarks come as Iran-backed Houthis have intensified attacks on Saudi Arabia in recent weeks, targeting oil facilities, airports, and military sites, amid renewed war and battles between the Houthis and the Saudi-backed government after the collapse of a 2022 truce. Saudi Arabia, the world's largest oil exporter, faces constraints on its shipments due to Iran's blockade of the Strait of Hormuz and the Houthis' declared blockade of its ships in the Red Sea. However, shipments continue to flow, according to Azour. He added that the kingdom enjoys "strong domestic demand and a solid public sector, so the impact is limited." The Saudi economy is expected to contract by 3.3% this year, due to the repercussions of the war that began with US-Israeli strikes on Iran on February 28. The IMF's regional report, released Thursday, stated that all Gulf countries except Oman saw a decline in hydrocarbon production. The region's economy as a whole is expected to contract by 4.8% in 2026, but the IMF expects a strong recovery with growth of 9.1% next year, despite high uncertainty.