Meed | IMF cuts Saudi growth forecast

IMF cuts Saudi growth forecast

27 July 2023

The Washington-based IMF has downgraded its real GDP growth projection for Saudi Arabia in 2023 to 1.9 per cent in its latest World Economic Outlook update due to the country’s extended oil production cuts.

The fund had in April anticipated a growth rate of 3.1 per cent for the year, adjusting this forecast to 2.1 per cent in June as a result of global macroeconomic concerns and uncertainties in oil demand.

In response to the economic slowdown, Saudi Arabia announced on July 3 that it would extend its voluntary production cut of 1 million barrels a day to include August, aiming to stabilise oil markets.

The country’s prolonged production cut and the challenging global economic conditions have now impacted growth prospects in the fund’s estimations.

The downward revision in Saudi Arabia’s growth forecast has broader implications for the wider Middle East region, which the IMF now expects to grow by 2.6 per cent in 2023, down from 3.1 per cent in its April forecast.

Globally, the IMF slightly raised its economic growth estimate to 3 per cent real GDP growth, an increase of 0.2 percentage points from its April forecast. The outlook for 2024 remains unchanged at 3 per cent.

The slump in Saudi Arabia’s economic output contrasts strongly with its performance in 2022, when its growth was gauged at 8.7 per cent by the IMF, driven by a boost in oil revenue amid high energy prices. The kingdom also achieved its first budget surplus in almost a decade.

https://image.digitalinsightresearch.in/uploads/NewsArticle/11033292/main1139.gif

MEED Editorial