January 20, 2020 / 1:02 PM / a month ago

IMF trims 2020 Saudi growth forecast to 1.9% on lower oil output

DUBAI, Jan 20 (Reuters) - The International Monetary Fund (IMF) lowered its forecast for Saudi Arabia’s economic growth to 1.9% this year due to oil output cuts agreed with oil exporters, having previously forecast the kingdom’s gross domestic product would grow 2.2%.

Riyadh led an agreement last month that committed the OPEC+ group of oil producers to some of the deepest output cuts in a decade, to avert oversupply and support prices.

The IMF said growth in the Middle East and Central Asia this year is expected to be 2.8%, 0.1 percentage point lower than its estimate in October.

“The downgrade for 2020 mostly reflects a downward revision to Saudi Arabia’s projection on expected weaker oil output growth following the OPEC+ decision in December to extend supply cuts,” said the fund in an update of its World Economic Outlook report.

Economic growth in the kingdom, the world’s biggest oil exporter, is expected to improve to 2.2% in 2021, the IMF said.

The Saudi economy, the largest in the Arab world, has suffered in recent years because of low oil prices and austerity measures aimed at reducing a huge budget deficit.

It remains dominated by hydrocarbon revenues despite Crown Prince Mohammed bin Salman’s plans to diversify it.

Lower oil prices and crude production cuts agreed by OPEC nations and producers outside the exporting group meant growth last year amounted to a mere 0.4%, according to government forecasts.

Saudi Arabia said last month that it expected economic growth of 2.3% this year. (Reporting by Davide Barbuscia; Editing by Simon Cameron-Moore)

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