Even in a year that’s shaping up as a disappointment for the global economy, Saudi Arabia will stand out.
The International Monetary Fund, which just lowered its 2019 global growth forecast for a fifth straight time, is turning far more downbeat on Saudi Arabia’s prospects, cutting its outlook for this year to just above zero. Among the biggest economies, only Italy will fare worse, it said.
The kingdom’s gross domestic product will expand 0.2% in 2019, down from the fund’s earlier estimate of 1.9%, according to its World Economic Outlook published on Tuesday. The IMF also expects a more modest pick-up next year, with a gain of 2.2%.
“While non-oil growth is expected to strengthen in 2019 on higher government spending and confidence, oil GDP in Saudi Arabia is projected to decline against the backdrop of the extension of the OPEC+ agreement and a generally weak global oil market,” the IMF said.
Despite an acceleration in non-oil growth this year to the fastest since 2015, output curbs negotiated by OPEC are increasingly a drag on an economy where the energy sector accounts for about 50% of GDP. The attack on Saudi oil infrastructure last month also put the spotlight on risks ahead.
“The impact on growth of the recent attacks on Saudi Arabia’s oil facilities is difficult to gauge at this stage but adds uncertainty to the near-term outlook,” the IMF said.