Economy

IMF cuts Saudi GDP forecast as trade turbulence continues

April 22, 2025, 5:10 PM

Passenger on the Riyadh Metro. The IMF expects consumer prices in Saudi Arabia to rise by 2% this year

GDP expected to grow 3% this year
Previous forecast was 3.3%
Warns of significant unpredictability

The International Monetary Fund has lowered its economic growth forecast for Saudi Arabia in response to escalating trade tensions and falling oil prices.

The IMF’s latest World Economic Outlook, released this week, predicts that Saudi Arabia’s GDP will grow by 3 percent this year, down from its previous forecast of 3.3 percent. It now expects Saudi GDP to rise by 3.7 percent next year.

It estimates that the country’s GDP increased by 1.3 percent in 2024.

Oil prices may drop by more than 15 percent this year and by close to 7 percent in 2026, according to the IMF. The Brent crude benchmark is already down about 10 percent since the start of 2025 at $67 per barrel on Tuesday.

The previous IMF projections were published in January, before President Donald Trump announced his sweeping programme of tariffs, lifting effective rates to their highest level in a century.

The forecasts in the latest World Economic Outlook are based on a scenario in which the tariffs went into effect as outlined by Trump on April 2. It also incorporates the initial responses from other countries.

Since then, however, some of the US levies have been paused and their future is in flux. China and the US have also engaged in tit-for-tat tariff increases.

Pierre-Olivier Gourinchas, the IMF’s chief economist, has written in a foreword to the report that other “possible paths exist”, amid significant “unpredictability” around global trade policies and the ultimate impact of protectionist approaches on different countries.

On Tuesday, at the report’s press launch in Washington DC, Gourinchas told reporters the fall in oil prices was “coming mostly from weaker global demand. So, it’s the weakening of global activity that is driving the decline of prices,” rather than the “increase in supply coming from Opec+ countries”.

He added that this would “play out in ways you sort of would expect. The commodity exporters are going to face lower export revenues from a decline in oil prices. That’s going to weigh on their fiscal outlook, on their growth.”

The IMF expects global growth to slow from 3.3 percent in 2024 to 2.8 percent this year, before picking up to 3 percent in 2026. The 2025 and 2026 figures have also been revised down since January with “nearly all countries” affected, according to the report.

Economic growth in the UAE is expected to hover around 4 percent in 2025, up from 3.8 percent in 2024, the IMF said.

Turkey’s growth is forecast “to bottom out” this year at 2.7 percent and jump to 3.2 percent next year in response to “recent pivots in monetary policy”.

Inflation is easing around the world but is likely to be higher than forecast in January, according to the IMF.

Consumer prices in Saudi Arabia and the UAE may rise by about 2 percent this year and in 2026, up from 1.7 percent last year.