The World Bank has slashed the Kingdom’s growth forecast to 2.5% in 2024, down from the 4.1% it penciled in January 2024, according to the lender’s latest MENA economic update (pdf). The Finance Ministry is targeting GDP growth of 4.4% in its budget for this fiscal year, Finance Minister Mohamed Al Jadaan said in December 2023.

IN CONTEXT: That’s in line with the International Monetary Fund forecast. It said in January that it sees the domestic economy growing at a 2.7% pace this year. The economy contracted 0.9% last year, down from 8.7% growth in 2022.

The silver lining: The non-oil economy will grow a strong 4.8% in 2024, up from the 4.3% that was penciled in in November 2023, the World Bank said. That’s broadly in line with official guidance, with Economy and Planning Minister Faisal Alibrahim having said at the World Economic Forum in January that non-oil GDP should grow 4.5-5.0% this year.

Looking ahead: The multilateral lender expects the local economy to grow 5.9% next year, up from its January 4.2% forecast. This is in line with the IMF’s January forecast of a 5.5% growth in 2025. GDP per capita is expected to grow 0.5% this year and 3.8% in 2025, up from a contraction of 2.8% in the previous year.

Fiscal balance: The budget deficit is expected to widen to 2.4% of GDP this year on falling oil receipts, up from 2.1% in the previous year, the report shows. Meanwhile, the government is penciling in a lower deficit of 1.9% of GDP for this fiscal year.

REGIONALLY- The multilateral lender is forecasting 2.8% growth in the GCC this year and 4.7% in 2025, the World Bank suggests, saying it expects voluntary oil production cuts to be phased out. It’s also expecting a 2.7% growth for the MENA region this year and 4.2% in 2025, matching pre-pandemic levels.

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