Weekly Insights - Saudi Indicators Point to Steady Momentum for 2026 Investors

Welcome to the latest edition of our Weekly Insights. In this issue we review the most important developments from last week across global markets, including updates on interest rate expectations, important data releases, and policy signals from major central banks. We also cover regional news that may influence capital flows and investor positioning in Saudi Arabia, along with a brief outlook for the weeks ahead.

Market & Macro

Last week, OPEC+ opted to maintain its oil-output quotas unchanged for the first quarter of 2026, keeping about 3.24 million barrels per day of production cuts in place, roughly 3% of global demand. The decision reflects a preference for stability at a time when sentiment towards a global supply glut and softening demand appears to be growing.

At the same time, OPEC+ approved a new mechanism to assess member countries’ maximum production capacity. A capacity audit, to be conducted between January and September 2026, will underpin baseline quotas starting in 2027, a move aimed at aligning quotas with actual capabilities and easing longstanding intra-group tensions.

As oil markets recalibrate, the broader macroeconomic backdrop for Saudi Arabia remains encouraging. Moody's expects Saudi real GDP to grow by 4.5% in 2026, up from around 4.0% in 2025, driven largely by a strong non-oil sector supported by mega-projects, healthy private consumption, and low unemployment.

Domestic Activity: Non-oil Sector Gains Momentum

The latest data from the Riyad Bank Purchasing-Managers’ Index (PMI) shows that Saudi Arabia’s non-oil private-sector continued to expand robustly in November, though the pace of new orders softened slightly. The headline PMI measured 58.5, down from October’s 60.2 but still deeply in expansionary territory.

Output activity climbed to its highest level in ten months, with the output sub-index rising to 63.7 as firms accelerated project completions ahead of year-end. Hiring remained solid, and business sentiment stayed positive, underpinned by expectations of further demand growth and ongoing investment flows.

This resilience in non-oil activity strengthens the view that the Kingdom’s economic diversification under Vision 2030 remains on track, even against a backdrop of modest oil prices and global uncertainty.

Fiscal Policy & Public Spending: Stability amid Adjustment

The government has approved its 2026 budget reflecting a deliberate shift in priorities. Spending is set at SAR 1.31 trillion while revenues are projected at SAR 1.15 trillion, resulting in an estimated deficit of SAR 165 billion, or 3.3% of GDP, a meaningful reduction from the 5.3% deficit in 2025.

Importantly, the budget signals a strategic reallocation: future expenditures will prioritize sectors like industry, logistics, technology and tourism rather than real estate mega-projects, marking the start of Vision 2030’s third phase.

This pattern suggests that the authorities are committed to sustaining private-sector confidence and long-term growth, even as oil-linked revenues fluctuate.

Global Markets and Investment Themes: Fed Expectations and the UBS Outlook

Global investors are increasingly focused on the path of U.S. monetary policy after a series of softer economic indicators last week. Market pricing has moved to price a materially higher probability of Fed easing in the near term.

A recent report by UBS builds on this narrative and suggests that an earlier and more gradual easing cycle may be likely. According to the report, the combination of slowing inflation momentum and signs of cooling in economic activity strengthens the case for a measured reduction in interest rates. UBS notes that sustained rate cuts could support valuations in both developed and emerging markets, while also encouraging renewed liquidity flows into high quality credit and other income strategies.

For institutional investors, these developments underline the importance of monitoring central bank communication and adjusting portfolio strategies to reflect the potential for a more supportive global rate environment. The next Federal Reserve meetings and economic releases will remain critical markers for medium term asset allocation and capital deployment decisions.

Closing Thoughts

This week’s developments illustrate how Saudi Arabia and global markets are navigating a complex transition: from oil dependency toward diversified growth, from cyclical risk to structural opportunity, and from conventional returns toward portfolio resilience. For investors and asset allocators alike, the message is clear: flexibility, selectivity and long-term thinking remain key in a world where stability is increasingly the exception, not the norm.

Sources 

• Reuters coverage of the OPEC+ meeting and capacity mechanism. 

• Reuters on OPEC+ capacity audit reporting. 

• Moody’s commentary as reported by Argaam 

• Riyad Bank Saudi Arabia PMI and Reuters coverage of the November release. 

• Saudi Ministry of Finance FY2026 Budget Statement and Reuters summary of the budget figures. 

• CME Group FedWatch tool for implied Fed cut probabilities and Reuters reporting on shifting market odds. 

• UBS Year Ahead and related UBS commentary on 2026 market outlook.