Categories: Economic News

IMF maintains Saudi Arabia economic growth forecast for 2022 at 7.6%

The International Monetary Fund (IMF) on Wednesday maintained its economic growth forecasts for Saudi Arabia amid concerns that the global economy could be headed for recession.

Saudi Arabia’s economy is still expected to grow 7.6 percent this year, which the IMF said would likely be one of the fastest rates in the world, while inflation was expected to be 2 .8% The government of Saudi Arabia has predicted that its economy will grow by 7.4% this year.

Saudi Arabia, the world’s largest oil exporter, is benefiting from rising oil prices as global demand continues to outpace production following a pandemic-induced recession.

The IMF said it expected the kingdom’s non-oil gross domestic product to grow 4.2 percent this year. Next year, real GDP was expected to increase by 3.7% and non-oil GDP by 3.8%.

The Fund said in a report that Saudi Arabia’s fiscal performance this year would exceed budget and for the first time since 2013 there would be a fiscal surplus of 5.5 percent of GDP.

The IMF said the fallout from Russia’s invasion of Ukraine had so far been limited for Saudi Arabia and that inflation was contained. He also said the kingdom should keep control of state spending despite higher oil revenues, although he said there was “room for more targeted social spending.”

Government officials in Saudi Arabia have said government spending would be divested from oil revenue after decades of oil-driven spending and cuts.

IMF mission chief Amine Mati told reporters that Saudi Arabia could raise non-oil revenue by taxing income or property, which currently does not exist, and should be considered by the government.

He also said the IMF believed Saudi Arabia should maintain the 15 percent value-added tax (VAT), which the kingdom imposed in 2020, although officials have said it could be lowered.

Asked whether the IMF’s forecast could be revised further in the face of fears of a global recession and the recent drop in oil prices, Mati said: “At this stage we do not expect any change.”

The IMF cut global growth forecasts in July, warning 07-26 that the risks of high inflation and the war in Ukraine were materializing and could push the global economy to the brink of recession if left unchecked.
Source: Reuters


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