Saudi economy praised by IMF for resilience, diversification progress
RIYADH — The International Monetary Fund's Executive Board has commended Saudi Arabia's strong economic performance, resilience to external shocks, and success in advancing diversification strategies, saying the Kingdom's medium-term outlook remains robust despite global uncertainty and weaker commodity prices.
In its concluding statement following the 2025 Article IV consultations, the IMF said Saudi Arabia's non-oil sector is driving growth, inflation remains contained, and unemployment among Saudi nationals fell to a record low of 7 percent in the fourth quarter of 2024.
The IMF attributed the gains to fiscal discipline, structural reforms, and continued investment under Vision 2030, which have helped balance fiscal stability with economic transformation goals.
Non-oil GDP expanded 4.5 percent in 2024, led by retail, hospitality, and construction, while oil GDP contracted 4.4 percent due to OPEC+ production cuts, resulting in overall GDP growth of 2 percent.
The current account shifted from a 2.9 percent surplus to a 0.5 percent deficit, financed by external borrowing and reduced foreign asset accumulation.
Saudi foreign reserves remain strong at $415 billion, covering 187 percent of the IMF's reserve adequacy metric.
The IMF raised its growth forecast for Saudi Arabia to 3.6 percent in 2025 from 3 percent in April, projecting real GDP to accelerate to 3.9 percent by 2026 as oil output gradually recovers.
Non-oil growth is expected to exceed 3.5 percent over the medium term, supported by Vision 2030 projects and major international events.
While warning of risks from weaker oil demand, lower government spending, or regional security tensions, the IMF said upside potential exists if oil production rises or additional Vision 2030 investments are made.
Board directors praised progress in strengthening public finance institutions, the shift to five-year medium-term fiscal planning, and proactive expenditure ceilings through 2030.
They encouraged counter-cyclical fiscal policy to support growth and welcomed the resilience of the banking sector, which remains well-capitalized and profitable with non-performing loans at 1.2 percent in 2024.
The report also highlighted preparations for the 2034 FIFA World Cup, estimating $26 billion in infrastructure investment that could contribute $9–14 billion to GDP, and noted a modernized investment law ensuring equal treatment for domestic and foreign investors.
IMF directors called Saudi Arabia's structural reforms since 2016 'impressive,' citing improved regulatory and business environments, rising female workforce participation, and human capital development.
They urged continued efforts to attract private investment and diversify the economy regardless of oil price fluctuations.
The IMF also acknowledged the Kingdom's regional leadership and active participation in multilateral forums, including the G20, stressing its role in addressing global challenges.
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