BEIRUT• Saudi Arabia’s economy will stall this year with growth “close to zero” due to lower oil revenue, the International Monetary Fund (IMF) said.
The fund lowered its 2017 growth forecast to 0.1% from 0.4%, citing OPEC production cuts, uncertainty over oil prices and the structural reforms the country is undertaking to reduce its reliance on crude, it said in a statement last Friday concluding its Article IV consultation. The IMF also lowered its non-oil growth projection to 1.7% from 2.1% — compared to actual growth of 0.2% in 2016.
Lower oil prices and austerity measures are weighing on Saudi Arabia’s economy, which contracted in the first-quarter for the first time since 2009 — illustrating the scale of the challenge facing the country’s new heir, Crown Prince Mohammed Salman, as he implements his blueprint for a transition away from oil dependency. Even so, the fund said it welcomed the government’s direction, which it said would help the fiscal deficit “narrow substantially in the coming years”.
Saudi Arabia’s fiscal deficit is expected to narrow to 9.3% of gross domestic product in 2017 and to just under 1% by 2022, from 17.2% last year, the fund said. — Bloomberg