RIYADH: The International Monetary Fund (IMF) has maintained its inflation forecast for Saudi Arabia at 2.8 percent for 2023, citing a strong currency and a cap on gasoline prices as contributing factors.
The IMF also predicted that the Kingdom’s non-oil sector would remain robust, with an average growth rate of 5 percent this year, which is significant for Saudi Arabia’s ongoing economic diversification efforts.
In its Regional Economic Outlook for the Middle East and Central Asia, the IMF emphasized that oil-exporting countries such as Bahrain, Iraq, Kuwait, Oman, Qatar, and Saudi Arabia had relatively low levels of headline and core inflation.
This was attributed to subsidies, price caps on certain products, the pegging of currencies to the strengthening US dollar, and the limited share of food in the consumer price index basket.
IMF Lauds Saudi Arabia’s Initiatives
The IMF mission to Saudi Arabia commended the government’s initiatives to decouple spending from fluctuations in oil prices through the establishment and implementation of fiscal rules. In April, the IMF revised its growth projection for the Saudi economy in 2023 to 3.1 percent, up by 0.5 percent from its previous estimate in January. However, the forecast for 2024 was downgraded to 3.1 percent from 3.4 percent.
The Organisation for Economic Co-operation and Development (OECD) also revised its forecast, raising Saudi Arabia’s gross domestic product growth to 2.9 percent in 2023, compared to its earlier projection of 2.6 percent in March. Meanwhile, a report by the General Authority for Statistics indicated that Saudi Arabia’s inflation rate remained steady at 2.7 percent in April compared to March.
Despite global challenges, including rising inflation and soaring interest rates, the IMF had previously highlighted Saudi Arabia as the fastest-growing economy among the G20 nations in October 2022. The country’s commitment to economic reforms and diversification has contributed to its resilience and positive economic outlook.
