IMF Raises Saudi Arabia’s 2025 Growth Forecast to 3.5% Driven by Government Projects and OPEC+ Adjustments
The International Monetary Fund (IMF) has increased its 2025 GDP growth forecast for Saudi Arabia to 3.5%, up from 3%. This revised outlook is primarily attributed to strong demand from government-led projects and the OPEC+ group’s strategy to gradually ease oil production cuts.
Despite lower oil prices impacting Saudi Arabia’s revenue, with a projected fiscal deficit of around $27 billion this year, the kingdom is pressing ahead with significant spending on its Vision 2030 economic transformation program. This ambitious initiative aims to diversify the economy away from its reliance on oil, with substantial investments already made in sectors like sports, tourism, and entertainment. The IMF report noted that “Robust domestic demand – including from government-led projects – will continue to drive growth despite heightened global uncertainty and a weakened commodity price outlook.”
While Saudi Finance Minister Mohammed Al-Jadaan indicated in May that the kingdom would “take stock” of spending priorities due to declining oil revenue, Saudi Arabia remains committed to hosting major international events. These include the 2029 Asian Winter Games, which will feature artificial snow and a man-made freshwater lake, and the 2034 World Cup, requiring the construction of 11 new stadiums and renovation of others. Such events necessitate substantial spending on construction and development.
The IMF anticipates that Saudi Arabia’s fiscal deficit will be largely financed through borrowing. The kingdom was the largest emerging market dollar debt issuer last year. However, according to the IMF, Saudi Arabia has ample capacity for further borrowing, with its net debt at approximately 17% of GDP, positioning it among the least indebted nations globally.
Previously, in April, the IMF had lowered Saudi Arabia’s 2025 GDP growth forecast to 3% from its initial January estimate of 3.3%. Additionally, the fund projects non-oil real GDP growth at 3.4% in 2025, which is about 0.8% lower than last year.
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