DUBAI: The International Monetary Fund lowered its 2024 forecast for economic growth in Saudi Arabia to 2.7% on Tuesday, projecting a slower recovery amid lower oil production, but said non-oil growth this year was expected to remain “robust”.

In October, the Fund had projected GDP growth in the world’s top oil exporter of 4% in 2024, after a sharp slowdown last year on the back of lower oil prices and production cuts.

It has also significantly cut its forecast for growth in 2023, now estimating a GDP contraction of 1.1% from a projected growth of 0.8% in October’s report.

The Saudi government has estimated GDP growth of 0.03% for 2023, narrowly avoiding a contraction, with official data yet to be released.

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GDP growth is expected to accelerate to 5.5% in 2025, the IMF said.

Overall growth in the Middle East and Central Asia region was also revised downwards to 2.9% from a previously estimated 3.4% in October.

“The revisions are mainly attributable to Saudi Arabia and reflect temporarily lower oil production in 2024, including from unilateral cuts and cuts in line with an agreement through OPEC+…whereas non-oil growth is expected to remain robust,” the IMF said.

The IMF will release a more detailed Middle East regional outlook on Wednesday.

Saudi Arabia, the Arab world’s biggest economy, is midway through Vision 2030, a plan to boost non-oil sectors such as tourism and manufacturing, diversify public revenue streams away from hydrocarbons, and create jobs for citizens.

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The government has forecast a fiscal deficit over the coming years as it increases spending to meet Vision 2030 targets, and aims to maintain non-oil GDP growth above 5%.