IMF revises Saudi GDP growth down on oil cuts

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The International Monetary Fund (IMF) has revised Saudi Arabia’s economic growth forecast downwards by nearly one percentage point, primarily due to reductions in oil production.

This revision is the most significant among major economies and has impacted the broader Middle East and North Africa (MENA) region, which is now projected to grow by 2.2 per cent this year.

This represents a downward revision of half a percentage point from the IMF’s projections three months ago, according to its World Economic Outlook.

Saudi’s Vision 2030 programme

Saudi Arabia is undergoing a significant economic transformation under its Vision 2030 initiative, which aims to reduce its dependence on oil.

The Public Investment Fund (PIF), the country’s sovereign wealth fund, is at the forefront of this effort, investing billions in various sectors, including electric vehicles, sports, and futuristic urban projects. In May, Reuters reported that the PIF is considering a reorganisation to reprioritise projects and review some expenses.

The IMF now projects Saudi Arabia’s gross domestic product (GDP) growth to be 1.7 per cent this year, a reduction of 0.9 percentage points from its April forecast. For 2025, the GDP growth forecast has been adjusted downwards by 1.3 percentage points to 4.7 per cent.

Economy

Despite these challenges, Saudi Arabia’s non-oil economy has shown resilience. Valued at SAR1.7tn(approximately $453bn) at constant prices, the non-oil sector has seen growth driven by exports, investments, and consumer spending.

Last year, private-sector investments in the kingdom surged by 57 per cent, reaching a record SAR959bn ($254bn). The arts and entertainment sector grew by 106 per cent, and real service exports saw a remarkable increase of 319 per cent.

Additionally, the food sector recorded 77 per cent growth, transport and storage services grew by 29 per cent, health and education sectors expanded by 10.8 per cent, and trade, restaurants, and hotels increased by 7 per cent. Transport and communications also saw a growth of 3.7 per cent.

As a key member of the Organization of the Petroleum Exporting Countries (OPEC), Saudi Arabia has been leading the group, along with allies such as Russia, in reducing oil output to stabilise the market.

OPEC+ members are currently cutting production by a total of 5.86 million barrels per day (bpd), or about 5.7 per cent of global demand. Last month, the group agreed to start phasing out 2.2 million bpd of these cuts over a year, beginning in October.

Read: Saudi Arabia hits important economic milestone: Non-oil activities at 50% of GDP