IMF raises Saudi growth forecast

The International Monetary Fund (IMF) has raised its 2018 growth forecast for Saudi Arabia by 0.2 per cent.

In its July World Economic Outlook, the organisation projected the Saudi economy would grow 1.9 per cent this year from 1.7 per cent forecast in April.

The new figure means the IMF expects the world’s largest oil exporter to grow faster than it did in 2016 after projecting a 0.9 per cent contraction in the economy for last year.

The organisation’s growth forecast for 2019 remained stable at 1.9 per cent.

The upward 2018 projection comes following a surge in the oil price, with a 49 per cent rise in Brent crude over the last 12 months to around $72.

The IMF is projecting that oil prices will end the year up 33 per cent, a 15 per cent increase on its previous forecast, amid uncertainty surrounding supply due to impending US sanctions on Iran.

Read: US will consider some oil waivers on Iran sanctions

It said oil prices rose 23.3 per cent last year after declining 15.7 per cent in 2016 and is predicting a 1.8 per cent decline next year.

Saudi government data showed gross domestic product, adjusted for inflation, grew 1.2 per cent in the first quarter after shrinking for the first time in eight years during 2017 due to an economic downturn and lower oil production under a deal between OPEC and the world’s top oil exporters.

The kingdom has said it will up production this year to make up for falling Iranian output.

Read: Saudi GDP resumes annual growth in Q1 after falling for four quarters

Despite the positive momentum, Saudi Arabia also saw unemployment among citizens rise from 12.8 to 12.9 per cent and more than 234,000 foreign workers leave their jobs during the first three months of the year.

Read: Saudi unemployment rises in Q1, 234,000 foreign workers leave jobs

The IMF increased its 2018 growth forecast for the Middle East, North Africa, Afghanistan and Pakistan by 0.1 per cent to 3.5 per cent.

This is a 1.3 per cent increase on the 2.2 per cent growth estimated in 2017 but behind the 5 per cent estimated in 2016.

Growth in the region next year is expected to be 3.9 per cent.