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The Kingdom’s economy is expected to grow by 1.7% this year before accelerating to 4.7% in 2025 and 2026 on the back of government-led diversification efforts, Arab News reports, citing a report by credit rating agency Moody’s.
Moody’s growth estimates for this year are slightly more optimistic than most: Growth projections for 2024 have trended down all year, with the Finance Ministry recently downgrading its 2024 forecast to a 0.8% growth clip, down from the 4.4% the government had penciled in last December. The World Bank most recently put its 2024 growth projections at 1.6% in October (pdf), marking a downward revision from initial projections of 4.1% and 2.5%. Meanwhile, the IMF cut back an earlier 4% estimate to 2.7% in January, before slashing it again to 2.6% in April, 1.7% in July, and finally 1.5% in October.
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But 2025 expectations are looking aligned: The Finance Ministry sees Saudi’s GDP growing at 4.6% in 2025, while the World Bank and the IMF have pegged next year’s growth at 4.9% and 4.6%. Analysts are broadly in agreement that a resumption of oil flows due to the phasing out Opec+ production cuts as well as considerable investments in the non-oil economy will drive faster growth next year.
REMEMBER: The Kingdom’s real GDP grew 2.8% y-o-y in 3Q 2024, breaking a four-quarter slump, according to recent flash estimates by the General Authority of Statistics (Gastat). The rebound came on the back of a 4.2% increase in non-oil activities and a 3.1% increase in government activity. Final figures are slated for release on Sunday, 8 December.
Moody’s sees inflation inching up before stabilizing: Saudi Arabia’s inflation rate is forecasted to settle at 1.6% this year, before accelerating to 1.9% in 2025 and 2% in 2026, Moody’s said.
IN CONTEXT- Inflation held steady at 1.6% for three consecutive months from March through to May, before falling to 1.5% in June and July, and returning to 1.6% in August. Inflation later peaked in October at 1.9% y-o-y, largely on the back of rising home rentals.
