RIYADH: The International Monetary Fund has raised its expectations for Saudi Arabia’s economic growth in 2025 to 6 percent – up from 5.5 percent predicted earlier this year.
In its latest report, the IMF also noted that the Kingdom’s output will grow by 2.6 percent in 2024, down 0.1 percent compared to the previous projection.
The financial institution added that the overall economic growth in the Middle East and Central Asian region is projected at 2.8 percent and 4.2 percent in 2024 and 2025, respectively.
Earlier in April, the World Bank also raised the growth prospects of the Kingdom’s economy to 5.9 percent in 2025, up from an earlier projection of 4.2 percent.
Taming inflation should be a priority
According to the IMF, global economic growth, which is estimated at 3.2 percent in 2023, is projected to continue at the same pace in 2024 and 2025.
The report further pointed out that global headline inflation is expected to drop 5.9 percent this year after 2023’s 6.8 percent average.
However, the IMF warned that it is still too early to declare victory in the fight against inflation.
“Bringing inflation back to target should remain the priority. While inflation trends are encouraging, we are not there yet. Somewhat worryingly, progress toward inflation targets has somewhat stalled since the beginning of the year. This could be a temporary setback, but there are reasons to remain vigilant,” said IMF Economic Counsellor Pierre-Olivier Gourinchas.
He added: “Most of the good news on inflation came from the decline in energy prices and in goods inflation. The latter has been helped by easing supply-chain frictions, as well as by the decline in Chinese export prices. But oil prices have been rising recently in part due to geopolitical tensions and services inflation remains stubbornly high.”
Global economic recovery differs by region
According to the report, the global economy was resilient in 2023, but these gains were felt differently as low-income countries continued to experience the after-effects of the pandemic.
“We now estimate that there will be more scarring for low-income developing countries, many of which are still struggling to turn the page from the pandemic and cost-of-living crises,” said Gourinchas.
The IMF also called on countries to rebuild their fiscal buffers to help protect their sovereign debt levels, which will help them reverse the decline in medium-term growth prospects.
“Going forward, policymakers should prioritize measures that help preserve or even enhance the resilience of the global economy. The first such priority is to rebuild fiscal buffers. Even as inflation recedes, real interest rates remain high and sovereign debt dynamics have become less favorable,” he added.
