The International Monetary Fund (IMF) has downgraded Saudi Arabia’s economic growth forecast by nearly one percentage point, primarily due to reductions in oil production. This adjustment is the most substantial among major economies and has affected the broader Middle East and North Africa (MENA) region, which is now expected to achieve a growth rate of 2.2 per cent this year.
This represents a downward revision of 0.5 percentage points compared to the IMF’s projections three months ago, as outlined in its World Economic Outlook. Saudi Arabia’s Vision 2030 programme aims to reduce its reliance on oil and is currently driving significant economic transformation.
Leading this effort is the Public Investment Fund (PIF), the country’s sovereign wealth fund, which has been investing billions across sectors such as electric vehicles, sports, and futuristic urban projects. In May, Reuters reported that the PIF is considering a reorganisation to prioritise projects and review expenditures.
The IMF now anticipates Saudi Arabia’s gross domestic product (GDP) growth to reach 1.7 per cent this year, marking a decrease of 0.9 percentage points from its April forecast. For 2025, the GDP growth projection has been revised downwards by 1.3 percentage points to 4.7 per cent.
Despite these challenges, Saudi Arabia’s non-oil economy has demonstrated resilience. Valued at SAR 1.7T (approximately $453B) at constant prices, the non-oil sector has experienced growth driven by exports, investments, and consumer spending.
In the past year, private-sector investments in the kingdom surged by 57 per cent, reaching a record SAR 959B ($254B). The arts and entertainment sector expanded by 106 per cent, while real service exports saw a notable increase of 319 per cent.
Furthermore, the food sector recorded growth of 77 per cent, transport and storage services increased by 29 per cent, and the health and education sectors expanded by 10.8 per cent. Trade, restaurants, and hotels also grew by 7 per cent, with transport and communications seeing a 3.7 per cent increase.
As a key member of the Organization of the Petroleum Exporting Countries (OPEC), Saudi Arabia has played a leading role alongside allies like Russia in reducing oil output to stabilise the market.
Currently, OPEC+ members are collectively cutting production by 5.86 million barrels per day (bpd), which equates to about 5.7 per cent of global demand. Last month, the group agreed to gradually phase out 2.2 million bpd of these cuts over the course of a year, starting in October.
