Saudi Arabia’s economy had one of its steepest contractions of the past two decades after reducing oil output to support crude prices, according to the International Monetary Fund, a slump matched only by crisis-stricken Argentina among the Group of 20 nations.
Gross domestic product slipped 1.1% last year, the IMF said in the World Economic Outlook on Tuesday, flipping its previous forecast for a small expansion. While expecting the kingdom to return to growth this year and next, its projection for Saudi Arabia saw the biggest downgrade for 2024 after Argentina in the G-20.
Seven years into Crown Prince Mohammed bin Salman’s campaign to diversify and open up the world’s largest crude exporter, the setback is a reminder of just how dependent the $1.1 trillion economy remains on the fortunes of the oil sector that accounts for about 40% of GDP.
It’s also a stark turnaround from 2022, when record crude output propelled Saudi Arabia to the fastest growth in the club of industrial and emerging economies with a surge of almost 9%. The Saudi government is forecasting much faster rebound than the IMF this year and estimates the economy narrowly avoided a contraction in 2023.
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