Saudi economic growth to hit 2% in 2017: IMF

Economic growth in Saudi Arabia, the GCC’s biggest economy, is expected to hit 2.0 percent in 2017, a 0.1 percent increase from the International Monetary Fund’s (IMF) April outlook.

The agency left its expectation for Saudi GDP growth in 2016 unchanged at 1.2 percent in its latest World Economic Outlook report.

Saudi Arabia, like other oil exporters in the Middle East, is benefitting from the recent modest recovery in oil prices while pursuing fiscal consolidation in response to structurally lower oil revenues, the IMF said.

Oil markets began to recover in February this year, as crude prices were bolstered by declines in excess oil supply – mainly due to a slowdown in non-OPEC production and some supply disruptions, notably in Nigeria and Canada.

However, several countries in the MENA region continue to be plagued by conflict, clouding the economic outlook, the report added.

“Geopolitical tensions, domestic armed strife, and terrorism are taking a heavy toll on the outlook in several economies, especially in the Middle East, with further cross-border ramifications.”

The IMF expects growth in the Middle East, North Africa, Afghanistan, and Pakistan to hit 3.4 percent this year – up 0.3 percent from its April outlook – before declining to 3.3 percent in 2017.

Meanwhile, the outlook in other large emerging markets has changed slightly.

Consumer and business confidence seems to have bottomed out in Brazil, and the Latin American nation’s GDP contraction in the first quarter was milder than anticipated, the IMF said. As a result, the agency predicts that the recession this year will be less severe than previously anticipated, with a return to positive growth projected in 2017.

In India, economic activity remains buoyant, but the growth forecast for 2016-17 was slightly trimmed, reflecting a more sluggish investment recovery.

Russia, on the other hand, is seeing relief from higher oil prices, and the decline in GDP this year is now projected to be milder. However, “prospects of a strong recovery are subdued given longstanding structural bottlenecks and the impact of sanctions on productivity and investment,” the IMF said. 

Write to Jerusha Sequeira at jerusha.s@argaamnews.com