The International Monetary Fund (IMF) has revised higher its growth projection for Saudi Arabia to 3 percent for 2020, supported by an increase in Kingdom’s refining capacity.
“We have raised the growth forecast for 2020 and this is largely because we now assume the new Jazan refinery starts operations at the end of this year which will boost real oil GDP growth in 2020,” the IMF Mission Chief for Saudi Arabia and Assistant Director in the Middle East Department Tim Callen told Argaam.
The fund, in its 2019 April “World Economic Outlook”, projected the real GDP growth at 2.1 percent.
In its bond prospectus listed on the London Stock Exchange, state-owned Saudi Aramco said that the Jazan integrated petrochemical refinery is expected to start operations by year-end and will have a full capacity to process 400,000 barrels of crude oil per day in 2020.
Read: Saudi Aramco to begin Jazan refinery operations by 2019-end
Last week, the IMF said that Kingdom’s real non-oil growth is expected to strengthen to 2.9 percent in 2019 as government spending and confidence increase.
“We have revised non-oil growth upward in 2019 from 2.6 percent to 2.9 percent. This is largely because monthly indicators such as the purchasing managers index have been improving suggesting that confidence is returning to the economy as the government spends more and implements reforms,” he added.
Read: IMF's report proves Saudi reforms made positive progress: Al-Jadaan
While the IMF’s latest report underscored that fiscal consolidation as the key to rebuilding fiscal buffers and reducing medium-term fiscal vulnerabilities, Callen said Saudi Arabia can achieve additional fiscal consolidation by continuing to implement new non-oil revenue measures, energy price reforms, and keeping tight control on spending.
Write to Parag Deulgaonkar at parag.d@argaamplus.com
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