IMF Lowers Saudi Arabia's Economic Growth Forecast for 2024 & 2025

The International Monetary Fund (IMF) has adjusted its growth forecast for Saudi Arabia, predicting an increase of 1.5% for 2024 and 4.6% for 2025. This marks a decrease of 0.2 and 0.1 percentage points, respectively, compared to previous estimates released in July 2024.

The revised forecast comes in the wake of ongoing challenges, including extended oil production cuts and geopolitical tensions in the region, particularly the conflict in Sudan, which has resulted in significant economic losses. Earlier in October 2024, the Saudi Ministry of Finance also lowered its growth estimate for 2024 to 0.8%, a stark reduction from its initial projection of 4.4%.

Despite these economic headwinds, the Saudi Ministry of Economy and Planning has reported a 4.9% year-on-year growth in non-oil activities for the second quarter of 2024. This growth is attributed to advancements in the manufacturing sector, which grew by 3.4%. The report highlights the government's commitment to economic diversification and increasing localization efforts, with the unemployment rate dropping to a historic low of 7.1%, nearing the Vision 2030 target of 7%.