Saudi economy resilient amid global shocks, says IMF
A. SREENIVASA REDDY (ABU DHABI) Saudi Arabia's economy has demonstrated strong resilience to external shocks, with the non-oil sector expanding, inflation remaining contained, and unemployment reaching record lows, according to the International Monetary Fund's (IMF) 2025 Article IV Consultation.The IMF reported that non-oil real GDP grew by 4.5% in 2024, driven by retail, hospitality, and construction sectors. In contrast, oil GDP fell by 4.4% due to continued OPEC+ production cuts, resulting in a moderated overall growth rate of 2.0%. Despite this, inflation stayed low, averaging 1.7%, while the unemployment rate among Saudi nationals dropped to an all-time low, with youth and female unemployment halving over the past four years.The current account shifted from a surplus of 2.9% of GDP in 2023 to a deficit of 0.5% in 2024, as increased investment-related imports and remittance outflows weighed on external balances. Nonetheless, the Saudi Central Bank's net foreign assets stabilised at $415 billion, covering 187% of the IMF's reserve adequacy metric.The IMF projects non-oil growth to remain above 3.5% over the medium term, supported by Vision 2030 projects and government-led initiatives. Real GDP growth is forecast to accelerate to 3.6% in 2025 and 3.9% in 2026, as OPEC+ production cuts are gradually phased out. Inflation is expected to stay contained, with CPI averaging 2.1% in 2025.Despite emerging twin deficits—fiscal and current account—the IMF said fiscal and external buffers remain ample. The fiscal deficit is projected to widen to 4.0% of GDP in 2025, with public debt rising to 29.8% of GDP.While the outlook remains strong, the IMF warned of downside risks from weaker oil demand, lower government spending, and regional security tensions. On the upside, growth could benefit from higher oil production or additional Vision 2030-linked investments.
Under Article IV of the IMF's Articles of Agreement, the IMF holds bilateral discussions with members, usually every year. A staff team visits the country, collects economic and financial information, and discusses with officials the country's economic developments and policies.
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