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The International Monetary Fund (IMF) revised downward its forecast for Saudi Arabia’s economic growth to 1.5% this year from its July estimate of 1.7%, according to its latest World Economic Outlook report (pdf). The Washington-based lender said the downgrade came on the back of extended oil production cuts and disruptions from the ongoing conflict in Sudan. This is the IMF’s fourth downward revision of its forecast for Saudi’s economic growth this year.
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LOOKING AHEAD- A bounceback is in the cards: The IMF slightly lowered its projections for Saudi GDP growth in 2025 to 4.6% — a slim 0.1 percentage point below its July forecast.
This is in line with gov’t projections for 2025, but not 2024: The Finance Ministry sees Saudi’s economy growing at a 4.6% clip next year, according to its pre-budget statement for FY 2025 which was published earlier this month. Meanwhile, real GDP is forecasted to grow at a 0.8% rate this year, on the back of an uptick in non-oil activities.
REMEMBER- Saudi’s GDP shrank 0.4% in 2Q 2024, marking the fourth consecutive quarter of contraction. Figures for 3Q are not yet available.
Balancing the budget: The IMF projects oil prices will rise by 0.9% to about USD 81 per barrel in 2024. This is still short of the USD 100 / bbl target the Kingdom needs to narrow its budget deficit, as the economy remains heavily reliant on oil revenues despite efforts to diversify.
Zooming out: Despite the short-term slowdown, the IMF is optimistic about the region’s broader recovery, with growth for the Middle East and Central Asia expected to rise from 2.4% in 2024, to 3.9% in 2025, as oil production cuts and shipping disruptions fade.
IN CONTEXT- Opec+ is planning to phase out supply cuts by December, putting it on course for a 180k barrel per day (bbl / d) hike by the end of the year, it said earlier. The lack of quota compliance by certain member states could even push the Kingdom and other members to boost production at a quicker rate.
