Saudi Arabia’s Economic Growth to Outpace Global Average in 2025
In a recent study by the International Monetary Fund, it is predicted that Saudi Arabia’s economic growth will surpass the global average in 2025.
The IMF’s World Economic Outlook update forecasts a 4.7 percent increase in the Kingdom’s output for next year, which is higher than the global forecast of 3.3 percent.
However, the growth rate for Saudi Arabia has been adjusted from an earlier estimate of 6 percent for 2025, now down to 4.7 percent. Additionally, the IMF has revised its 2024 projection for the Kingdom from 2.6 percent to 1.7 percent in its latest report.
The IMF described the global economy as being in a “sticky spot,” with worldwide output expected to increase by 3.2 percent in 2024 and 3.3 percent in 2025. The organization cited varied momentum in economic activity and inflation as factors affecting growth.
Global Economic Snapshot: Divergent Paths Ahead
Major economies are experiencing contrasting trends in their economic forecasts heading into 2024 and beyond.
The US is facing a slowdown in consumer spending and trade dynamics, leading to a revised growth projection of 2.6 percent for 2024 and 1.9 percent for 2025.
Europe’s recovery relies on the services sector, with growth expected to reach 0.9 percent in 2024 and 1.5 percent in 2025. China continues to exhibit resilience in its economy, with a growth forecast of 5 percent for 2024.
India’s growth forecast has been revised upward to 7 percent for 2024, while the UK and Japan anticipate modest growth rates.
Regional Impact and Global Trade
The IMF report highlights the impact of oil production and regional conflicts on economic prospects in the Middle East and Central Asia. Saudi Arabia and Sudan have seen revisions in their economic outlooks due to various factors.
World trade growth is expected to recover to about 3.25 percent annually in 2024-25, despite ongoing subdued manufacturing activity. The global trade-to-GDP ratio is expected to remain stable.
Inflation and Monetary Policy
Global disinflation efforts are facing challenges, with services price inflation complicating monetary policy normalization. Advanced economies are expected to experience a slower pace of disinflation in 2024 and 2025.
Inflation in emerging markets and developing economies is expected to persist at elevated levels, with a gradual decline compared to advanced countries. Energy costs and labor market conditions will play a role in shaping future inflation rates.