Saudi Arabia’s economy is forecast to contract 2.3 percent in 2020, with non-oil GDP expected to contract by 4 percent due in part to the global recession caused by the spread of the deadly coronavirus, the IMF said.
In 2021, however, Saudi Arabia’s economy is expected to grow by 2.9 percent, bouncing back as economists forecast an eventual return to normal around the globe.
Graphic via IMF.org
“The fast deterioration of the global economic outlook as the epidemic has spread and the breakdown of the OPEC+ agreement among oil suppliers have weighted heavily on commodity prices,” the IMF said. The IMF cautioned that “extreme uncertainty” surrounds the forecast because of the difficulties in predicting efforts to contain the disease.
Although a new deal has been reached with the OPEC+ group of countries to curb output, a worldwide supply glut still exists and demand is significantly lower due to the effect of stay-at-home measures. The IMF report – which was prepared before the OPEC+ agreement to cut almost 10 million barrels per day – said it expects oil prices to remain below $45 a barrel through 2023, about 25 percent less than 2019’s average.
Saudi Arabia’s predicted contraction is below the average global slowdown of 3% predicted by the IMF, “an extraordinary reversal from early this year, when the fund forecast that the world economy would outpace 2019 and grow by 3.3 percent,” the New York Times reports.
