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IMF trims Saudi 2023 GDP forecast but upbeat on 2024

Aramco's storage facility. Oil revenue reached SAR505.4bn in the first nine months of 2023, falling 24 percent year on year Aramco
Aramco made its biggest cut on the OSP in 13 months for February cargoes to a 27-month low amid competition from rival suppliers

The International Monetary Fund (IMF) has trimmed Saudi Arabia’s GDP growth forecast for 2023 to 0.8 percent from its July estimates of 1.9 percent.

The downgrade reflects the kingdom’s ongoing oil policy of maintaining production cuts, including unilateral cuts and those in line with an agreement through Opec+.

The IMF has been gradually lowering growth forecasts for the kingdom, as the GDP projection stood at 3.1 percent in May.

The Washington-based financial institution increased its estimated growth to four percent in 2024 in its latest World Economic Outlook report.

“Private investment, including that from gigaproject implementation, continues to support non-oil GDP growth, which remains strong and unchanged from previous projections,” the report added.

The IMF last month forecast Saudi Arabia to report a fiscal deficit of 1.2 percent of GDP in 2023, from a surplus of 2.5 percent in 2022. The deficit is projected to rise further to 1.6 percent of GDP next year.

Saudi Arabia extended its voluntary oil production cut of one million barrels per day (bpd) until the end of 2023, the state-run Saudi Press Agency reported this week. The cut, which took effect from July, will see output for October, November, and December capped at nearly nine million bpd.

Elsewhere, growth in the Middle East and Central Asia is projected to drop from 5.6 percent in 2022 to two percent in 2023 before picking up to 3.4 percent in 2024.

In sub-Saharan Africa, growth is estimated to decline to 3.3 percent in 2023 before rising to four percent in 2024, although remaining below the historical average of 4.8 percent.

The projected decline is due to worsening weather shocks, the global slowdown, and domestic supply issues in the electricity sector.

The IMF will be releasing its full regional outlook for the Middle East and Central Asia later this week.

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