- Last year, the Saudi economy expanded by 8.7%, benefiting from increased revenue due to high oil prices, which resulted in the country's first budget surplus in nearly a decade. According to the IMF, Saudi Arabia's Gross Domestic Product (GDP) growth is expected to decrease by more than half to 3.1% this year, in line with the projection for oil-exporting countries in the Middle East. However, the latest forecast is slightly higher than the 2.6% growth rate predicted by the IMF in January.
- Saudi Arabia is likely to slip back into fiscal deficit after almost a decade of its first surplus, as per the International Monetary Fund. The country's breakeven oil price for this year has been revised to $80.9, more than a fifth higher than the previous October forecast. Though it's an improvement from the past two years, it remains higher than the 2000-2019 average and is in contrast to a more favorable outlook for some other top regional energy producers like the United Arab Emirates.
Why it matters
Saudi Arabia's reliance on petrodollar inflows to fuel spending on job creation and infrastructure is once again in the spotlight due to a shift in budget calculations. This change in strategy may have influenced the kingdom's surprise decision to reduce oil output from this month onwards in collaboration with OPEC and its allies to stabilize oil prices. Under Vision 2030, a comprehensive economic overhaul program, Saudi Arabia is channeling significant investments into non-oil sectors such as tourism, private and financial industries, and ambitious infrastructure ventures.