The International Monetary Fund (IMF) cut on Monday its forecast for Saudi Arabia’s economic growth this year to 1.8 percent, down by 0.6 percentage point from the previous economic outlook in October, due to lower oil prices and lower oil production growth.
The IMF sees growth in Saudi Arabia for 2019 at 1.8 percent, compared to 2.4 percent expected last October, while it lifted its 2020 economic growth forecast by 0.2 percentage point from October to 2.1 percent.
In its World Economic Outlook (WEO) Update published on Monday, the IMF expects growth in the Middle East, North Africa, Afghanistan, and Pakistan region to remain subdued at 2.4 percent this year, before recovering to about 3 percent in 2020. The only individual country update for this region was provided for Saudi Arabia, OPEC’s largest oil producer.
“Multiple factors weigh on the region’s outlook, including weak oil output growth, which offsets an expected pickup in non-oil activity (Saudi Arabia); tightening financing conditions (Pakistan); US sanctions (Iran); and, across several economies, geopolitical tensions,” the IMF said in its WEO Update, which also notes that the global expansion has weakened.
The IMF forecasts that the global economy will grow at 3.5 percent in 2019 and 3.6 percent in 2020, 0.2 and 0.1 percentage point below last October’s estimates.
Commenting on oil prices, the IMF said today that “Crude oil prices have been volatile since August, reflecting supply influences, including US policy on Iranian oil exports and, more recently, fears of softening global demand. As of early January, crude oil prices stood at around $55 a barrel, and markets expected prices to remain broadly at that level over the next 4–5 years.”
In its regional outlook in November, the IMF said that higher oil prices may have helped Arab Gulf economies to grow again, but risks remained as economies were still vulnerable to sharp oil price movements.
By Tsvetana Paraskova for Oilprice.com
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