IMF slashes 2025 Saudi Arabia growth forecast on extended oil production cuts

The International Monetary Fund has lowered its 2025 GDP growth projection for Saudi Arabia to 3.3 per cent, mainly due to extended oil production cuts, it said on Friday in the latest update to its global outlook.

It also trimmed its 2024 growth estimate for the Gulf state to 1.4 per cent.

In its October Regional Economic Outlook report, the IMF had estimated growth would accelerate to 4.6 per cent this year from a projected 1.5 per cent in 2024.

The cut to Saudi Arabia’s GDP forecast led to an overall lowering of the IMF’s growth projection for the Middle East and Central Asia region to 3.6 per cent this year. That was down from its October forecast of 3.9 per cent.

“In the Middle East and Central Asia, growth is projected to pick up, but less than expected in October,” the IMF said in Friday’s update.

“This mainly reflects a 1.3 percentage point downward revision to 2025 growth in Saudi Arabia, mostly driven by the extension of OPEC+ production cuts.”

Most analysts expected economic growth in Saudi Arabia, the world’s biggest oil exporter, to pick up sharply in 2025 on higher oil output after two years of modest growth. An October Reuters poll forecast the Saudi economy would expand 4.4 per cent in 2025, while the Saudi government projects 2025 growth at 4.6 per cent.

However, in December, the OPEC+ nations, which include Saudi Arabia, pushed back the start of oil output rises by three months until April, and further extended the full unwinding of cuts due to weak demand and rising production outside the group.

Declining oil prices and extended cuts to oil production have weighed on Saudi Arabia’s revenue in recent years, but Riyadh is pushing ahead with a spending plan to boost non-oil growth and deliver on its economic transformation plan.

The IMF said it expected energy commodity prices to decline by 2.6 per cent in 2025, more than assumed in October.

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