KSA economic growth to outstrip global average in 2025: IMF

RIYADH, July 18 (Arab News): Saudi Arabia's economic growth is expected to outpace the global average in 2025 according to the latest International Monetary Fund study.
The IMF's World Economic Outlook update puts the Kingdom's output increase at 4.7 per cent next year - above the 3.3 per cent forecast for the planet as a whole.
The figure for Saudi Arabia is down from an estimate released in April which anticipated a 6 per cent growth rate for 2025.
The IMF also scaled back its 2024 projection for the Kingdom, shifting from 2.6 per cent in its earlier forecast to 1.7 per cent in its most recent report.
The Washington-based institution described the global economy as being in a "sticky spot," although it maintained its earlier calculation that worldwide output would increase at a rate of 3.2 per cent in 2024 and 3.3 per cent in 2025.
"The growth forecast for 2024 in Saudi Arabia has been revised downward by 0.9 per centage point; the adjustment reflects mainly the extension of oil production cuts," the IMF said.
"Varied momentum in activity at the turn of the year has somewhat narrowed the output divergence across economies as cyclical factors wane and activity becomes better aligned with its potential. Services price inflation is holding up progress on disinflation, which is complicating monetary policy normalization," the July update stated.
The IMF added: "Upside risks to inflation have thus increased, raising the prospect of higher-for-even-longer interest rates, in the context of escalating trade tensions and increased policy uncertainty. To manage these risks and preserve growth, the policy mix should be sequenced carefully to achieve price stability and replenish diminished buffers." Across major economies, contrasting trends defined economic forecasts heading into 2024 and beyond.
Earlier in the year, the US confronted a sharper-than-anticipated slowdown, driven by easing consumer spending and adverse net trade dynamics.
Growth projections for 2024 have been revised to 2.6 per cent, 0.1 per centage point lower than projected in April, with expectations for 2025 further declining to 1.9 per cent.
Tightening fiscal policies and cooling labor markets are poised to exert further pressure. Inflation remains stubborn, particularly in services, delaying potential monetary policy adjustments. Therefore, it is lagging behind other advanced economies in easing measures.
Europe's recovery hinges on robust performances in the services sector, with growth expected to reach 0.9 per cent in 2024, rising to 1.5 per cent in 2025.
Strengthened consumer demand, bolstered by higher real wages and improved financing conditions, supports this optimistic outlook. However, persistent weaknesses in manufacturing, notably in Germany, suggest a nuanced recovery across sectors.
China's economy continues to exhibit resilience, with a revised growth forecast of 5 per cent for 2024, driven by a resurgence in domestic consumption and robust export performance.
Yet expansion is anticipated to moderate to 4.5 per cent in 2025 and beyond as the country grapples with demographic shifts and slowing productivity gains.
Emerging markets and developing economies are projected to grow by 4.3 per cent in 2024, driven by a strong performance in Asia, particularly China and India.
India's growth forecast has been revised upward to 7 per cent for 2024, higher than April's projection of 6.8 per cent reflecting improved private consumption and positive carryover effects from 2023.
The UK anticipates modest growth of 0.7 per cent in 2024, expanding to 1.5 per cent in 2025. Economic prospects are shaped by ongoing fiscal restraint and residual impacts of earlier inflationary pressures on consumer and investment activities.
Japan's revised growth forecast for 2024 is 0.7 per cent from 0.9 per cent in April, influenced by transient supply disruptions and subdued private investment.
Nevertheless, robust wage settlements are anticipated to fuel a resurgence in private consumption by the latter half of the year.
The IMF report noted that oil production and regional conflicts continue to weigh heavily on economic prospects in the Middle East and Central Asia.