Saudi Arabia’s economy is expected to grow at a modest rate of 1.2 percent in 2016 despite fiscal consolidation, before picking up to 2 percent next year, the International Monetary Fund said Tuesday in its latest World Economic Outlook.
The fund expects oil prices to rise from an average of $43 a barrel to $51 per barrel in 2017 to aid in the recovery for the Middle East’s largest economy. The recent modest recovery in oil prices this year, however, is seen to have little impact on the growth of oil-exporting countries.
“Most continue to tighten fiscal policy in response to structurally lower oil revenues, and financial sector liquidity continues to decline,” the Fund said.
Like Saudi Arabia, growth in other GCC countries is expected to be hampered by fiscal consolidation in response to the drop in oil revenues as liquidity in the region continues to fall.
“Recent reforms and lower oil prices have helped improve macroeconomic stability in the oil-importing countries of the region,” the IMF added. “Yet growth remains fragile due to security concerns, social tensions, and lingering structural impediments.”
The IMF maintained its global growth estimate at 3.1 percent for 2016 and 3.4 percent for 2017 in its latest World Economic Report, while holding its forecast for weak global growth.
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