IMF slashes Saudi Arabia ’24 growth forecast due to extended oil cuts

The International Monetary Fund (IMF) on Tuesday downgraded its growth projection for Saudi Arabia in its July World Economic Outlook update.

The 2024 growth forecast has been slashed by 0.9 percentage points, dropping from the 2.6 per cent predicted in April to a much lower 1.7 per cent. The IMF attributes this downward revision primarily to the extension of oil production cuts implemented by OPEC+.

While a 1.7 per cent growth rate might seem modest, it represents a significant slowdown for Saudi Arabia, which has been striving to diversify its economy away from its heavy reliance on oil. The news gets even steeper for 2025. The IMF also revised its 2025 growth forecast downward by 1.3 percentage points, bringing it down to 4.7 per cent.

The details of the report have not been fully released, but the revisions suggest the extended production cuts are having a more substantial impact than initially anticipated. Lower oil production translates to less revenue for the kingdom, potentially hindering investment and economic activity.

This news comes as a wake-up call for Saudi Arabia. The IMF’s revisions highlight the urgency of the kingdom’s diversification efforts. With oil prices and production remaining volatile, a robust and diversified economy will be crucial for long-term Saudi prosperity.

Attribution: IMF July UPDATED Economic Outlook Report