The international Monetary Fund (IMF) has lowered its forecast for Saudi Arabia’s economic growth to 1.9%, retracting its initial anticipation on the kingdom’s economic growth to increase by 2.2% in 2020, according to Reuters.
It is worth noting that this decline is due to oil output cuts agreed with oil exporters. In addition, Riyadh led an agreement in December 2019 committing the Organization of the Petroleum Exporting Countries allies (OPEC+) to some of the deepest output cuts in a decade, to avert oversupply and support prices. It should be mentioned that lowering oil prices and crude production contributed to the achieved economic growth in 2019, which amounted to a mere 0.4%.
“The downgrade for 2020 mostly reflects a downward revision to Saudi Arabia’s projection on expected weaker oil output growth following the OPEC+ decision in December to extend supply cuts,” said the fund in an update of its World Economic Outlook report.
The Saudi economy has suffered in recent years because of low oil prices and austerity measures aimed at reducing a huge budget deficit. However, the kingdom’s economic growth is expected to rise to 2.2% in 2021, according to the IMF. Additionally, Saudi Arabia noted last month that it expected economic growth of 2.3% this year.