The International Monetary Fund (IMF) has recently revised its forecast for Saudi Arabia’s economic growth for the years 2024 and 2025. According to the IMF’s Global Economic Outlook report, the Saudi economy is expected to grow by 1.5 percent in 2024 and 4.6 percent in 2025, which is a slight reduction from the previous forecasts. This adjustment comes after the IMF issued its annual report on the Kingdom’s economy last July, where the GDP growth was projected to be 1.7 percent and 4.7 percent for the current and upcoming years. The IMF cited reasons such as oil production cuts in Saudi Arabia and the ongoing conflict in Sudan as contributing factors to the downward revision in economic growth forecasts.
The IMF also predicts that oil prices will increase by 0.9 percent in 2024 to around $81 a barrel. This forecast is in line with the recent actions taken by the Saudi Ministry of Finance, which lowered its estimates for economic growth for the current year to 0.8 percent from the previous forecast of 4.4 percent. This adjustment reflects the challenges faced by the Saudi economy due to factors such as oil production cuts and regional conflicts. Despite these challenges, the IMF remains optimistic about the growth prospects for the Saudi economy in the coming years.
On a positive note, the Saudi Ministry of Economy and Planning released an economic report for the second quarter of 2024, highlighting the progress made in strengthening the non-oil sector and diversifying the economy. Non-oil activities recorded a growth of 4.9 percent year-on-year, supported by a 3.4 percent growth in manufacturing industries during the same period. The report also focused on the performance of vital sectors such as the financial sector and the labor market, praising the Kingdom’s efforts to increase localization opportunities and reduce the unemployment rate to a historic low of 7.1 percent, close to the target set by Vision 2030.
Overall, while the IMF has revised its forecasts for Saudi Arabia’s economic growth slightly downwards, there are still positive signs of progress in the non-oil sector and efforts to diversify the economy. The Saudi government’s continued focus on Vision 2030 initiatives, such as increasing localization opportunities and reducing unemployment rates, is expected to support economic growth in the coming years. Despite challenges such as oil production cuts and regional conflicts affecting the economy, the IMF remains cautiously optimistic about the growth prospects for Saudi Arabia. It will be important for the government to continue implementing reforms and diversification efforts to ensure sustainable economic growth in the long term.
