A year after the Saudi economy grew 8.7% , as high oil prices boosted revenue and led budget surplus , the International Monetary Fund (IMF) has estimated that growth in kingdom will slow to 2.1% in 2023 due to oil production cuts.

The IMF forecasted that Saudi Arabia’s non-oil sector would remain robust, with an average growth rate of 5% in 2023, but highlighted that continued reforms would help the kingdom resilient to external shocks.

Although the Saudi economy is booming, the growth of the non-oil sector is considered critical as the country makes efforts to build buffers and diversify.

The IMF mission to Saudi also commended the country’s efforts to decouple spending from oil price fluctuations “by decisively establishing and implementing a fiscal rule.”

In April, the IMF revised its estimate for Saudi’s growth in 2023 by 0.5% to 3.1%, compared to its previous projection of 2.6% in January. However, IMF decreased its estimate for the kingdom by about 0.3% to 3.1% in 2024, down from 3.4% in January.

The IMF mission also complimented the ongoing structural reforms and noted that the country had observed significant progress in digitization, regulatory and business environment, and women’s participation in the workforce.

According to the IMF, the country is the fastest-growing economy among the G20 nations, pointing out the country’s progress in reducing the unemployment rate.

In its Regional Economic Outlook for the Middle East and Central Asia, the IMF noted that oil-exporting countries such as Bahrain, Iraq, Kuwait, Oman, Qatar, and Saudi Arabia had relatively low headline and core inflation levels. This was credited to subsidies, price caps on certain products, the pegging of currencies of the strengthening US dollar, and the limited share of food in the consumer price index basket.