The International Monetary Fund (IMF) has revised its economic growth forecasts for Saudi Arabia and Egypt. In its latest report on the global economy, the IMF lowered its projection for Saudi Arabia’s economic growth to 2.7% in 2024 from the previously anticipated 4% due to a decline in oil production. However, the IMF expects non-oil economic activity to remain strong this year.
According to the updated data from the IMF’s annual report on the global economy, Saudi Arabia’s economy contracted by 1.1% in 2023, compared to the previously expected growth of 0.8% in October last year. The Saudi government’s estimates indicate a marginal 0.03% growth in the country’s gross domestic product in 2023 in an effort to avoid contraction, although official data has not been released yet.
Conversely, the IMF raised its growth forecasts for 2025 to 5.5% from 4.2% anticipated in October last year. The IMF stated that the adjustments primarily pertain to Saudi Arabia and reflect a temporary decline in oil production in 2024, including reductions from one side and cuts within the framework of the OPEC+ alliance, while non-oil economic growth is expected to remain robust.
Saudi Arabia, boasting the largest economy in the Arab world, seeks to diversify its economy through Vision 2030. The Saudi government expects a fiscal deficit in the coming years with increased spending to achieve the objectives of Vision 2030, aiming to maintain non-oil GDP growth above 5%.
The IMF also revised its overall growth forecast for the Middle East and Central Asia downwards to 2.9% from the previous estimate of 3.4% in October last year.
For Egypt, the IMF lowered its economic growth forecast to 3% for the current year from the previous anticipation of 3.6% in October last year. Additionally, the IMF projected a 4.7% growth for the Egyptian economy in 2025, a decrease from the previously expected 5% as per the latest reports on the global economic outlook from October last year.
The IMF is scheduled to release more detailed forecasts for the Middle East region tomorrow.
The IMF raised its global growth expectations for 2024 to 3.1% from the 2.9% anticipated in October 2023, pointing to the resilience of major advanced and emerging economies worldwide, following notable reassessments for the United States, China, India, Russia, and Mexico.
Despite the upward revision in growth expectations, global growth is expected to remain below its recent historical average of 3.8% for this year and the next due to the continued effects of interest rate hikes, the phasing out of COVID-19-related government support, and ongoing declines in productivity levels.
The IMF now expects the US economy to grow by 2.1% in 2024, a slight decrease from the previously projected 2.5% for 2023. The IMF attributed this improvement to the larger-than-anticipated growth achieved in 2023.
In the same vein, the Chinese economy is projected to achieve a growth rate of 4.6% this year, a decrease from 5.2% in the previous year. As for India, the IMF anticipates a growth rate of 6.5% this year, an increase of 0.2% from October last year, following a growth rate of around 6.7% in 2023. The IMF also raised growth prospects for Russia, Iran, and Brazil for the next year.
Despite continued improvements in many Asian economies, Europe continues to influence global expectations, with the IMF highlighting “significant weak growth in the Euro area.” Germany is expected to record a slower growth rate within the G7, with an increase of only 0.5% this year after contracting by 0.3% in 2023. It is also expected that the UK, France, and Italy will experience growth rates of 1% or less this year. The Spanish economy is expected to perform slightly better, with a growth rate of 1.5%.
The IMF attributed the weak growth in the Euro area to “consumer confidence weakness and the continued impact of energy price increases.”
Overall, the global economic outlook in 2024 appears to be less bleak for many countries compared to 2023 when the estimates anticipated a 4% contraction from the 30 economies mentioned in the report, according to the IMF.
