In its latest World Economic Outlook Update for January 2024, the International Monetary Fund (IMF) has revised its growth forecasts for Saudi Arabia’s economy. The IMF lowered its projection for the Kingdom’s economic growth in 2024 by 1.3 percentage points to 2.7 percent, while simultaneously raising the forecast for 2025 by the same amount to 5.5 percent. This adjustment reflects a downward revision compared to the estimates issued in October.
Read more: IMF urges GCC countries to further enhance non-oil sector growth
Global economic downturn
According to the report, Saudi Arabia’s economy experienced a contraction of approximately 1.1 percent in 2023 after achieving a growth rate of 8.7 percent in 2022.
The IMF stated that it has generally downgraded its growth forecast for the Middle East and Central Asia region in the current year by 0.5 percentage points compared to its previous estimate. The revised projection for the region in 2024 is now 2.9 percent, while the estimate for 2023 was 2 percent. However, the IMF expects growth to improve to 4.2 percent in 2025.
Reducing growth
The downward revision in growth prospects for the Middle East and Central Asia, according to the IMF, is primarily attributed to Saudi Arabia. This is largely due to a temporary decline in oil production in 2024, resulting from Saudi’s unilateral production cuts and cuts implemented in accordance with an agreement among OPEC+ members. It’s worth noting that OPEC+ consists of OPEC and independent oil-producing nations, including Russia.
Saudi Arabia is the largest oil producer within OPEC and is one of the world’s leading exporters of crude oil. Despite the expected decline in oil production, the IMF anticipates that the Kingdom’s non-oil sectors will continue to exhibit strong growth.
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