IMF Slashes Saudi Arabia GDP Growth 2023-2024, Saying the Country Can’t Achieve Budget Balance This Year unless International Oil Prices Surge to $81 per Barrel

On Wednesday May 3, local time, the International Monetary Fund (IMF) said in its latest economic forecast for the Middle East and Central Asia that Saudi Arabia needs an international oil price of $80.90 a barrel to achieve a balanced budget this year.

As of press time, the price of Brent crude oil futures is about $72/barrel, and the price of WTI crude oil futures is about $68/barrel.

As the world's largest crude oil exporter, the oil prices at which Saudi Arabia can breakeven this year are estimated to be lower than the $83.60/barrel and $85.80/barrel in 2021, but higher than the average oil price of $80.40/barrel over the past 20 years (as of 2019) at which the country broke even.

According to IMF forecasts, Saudi economic growth will slow sharply from 8.7% last year to 3.1% this and next year.

Real GDP growth in MENA oil exporters is expected to slow to 3.1% this year from 5.7% last year and remain at roughly that pace through 2024.

“The main growth driver in most oil exporters has shifted to non-hydrocarbon activities, reflecting the agreement to cut oil production,” IMF economists said.

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At the beginning of last month, several major OPEC+ producers led by Saudi Arabia announced that they would cut production by a total of 1.66 million barrels per day from May to December this year as a "precautionary measure aimed at supporting the stability of the oil market.”

The IMF now expects Saudi Arabia to run a budget deficit of 1.1% of GDP this year as lower oil production will reduce revenue.