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IMF: Saudi economic growth to be higher than forecast in 2019

April 29, 2019 at 11:56 am

A man counts Saudi riyal banknotes at a market in Riyadh, Saudi Arabia. [Fayez Nurdeline /AFP/Getty Images]

Saudi Arabia’s economic growth for 2019 is expected to be higher than original estimates as its non-oil sector expands faster than the wider economy, according to Reuters.  

“We expect non-oil growth to be at 2.6 per cent this year and 2.9 per cent for 2020,” the Director of the Middle East and Central Asia Department, Jihad Azour, told Reuters.

In January, the IMF forecast that Saudi’s economy would grow by 1.8 per cent in 2019. However, Azour revealed that the budget deficit could be 7.9 per cent higher than 2018, assuming that oil prices would be lower in 2019 compared to last year.

“Based on the early assessment of the [IMF] team, we think there are upside risks, i.e. growth could be slightly higher than the one we have in our projections,” Azour said.

Saudi central bank governor Ahmed Al-Kholifey told Reuters last week that the kingdom’s economic growth in 2019 would be “no less than 2 per cent”.

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The Saudi economy grew by 2.2 per cent last year.

Azour said an IMF team was now on the ground in Saudi Arabia and revised economic numbers were expected next week.

The IMF’s projection for the Saudi budget deficit in 2019 is based on the assumption that oil prices will remain in the mid-$60 per barrel range this year, he said.

Saudi Arabia had estimated a budget deficit of 4.6 per cent of gross domestic product in 2018 and its budget for 2019 forecast a deficit of 4.2 per cent of GDP.

Saudi Finance Minister Mohammed Al-Jadaan said last week the kingdom recorded a budget surplus of 27.8 billion riyals ($7.4 billion) in the January-March period, its first since oil prices plunged in 2014.