Fitch Solutions expects Saudi economy to grow 1.8% in 2023 ‎and 2.2% in 2024‎

A report by Fitch Solutions revealed that it expects the Saudi economy to grow by 1.8% during the year 2023, provided that the growth rate will rise to 2.2% in the fiscal year 2024.

According to “CNN”, the growth rate is expected to continue to rise during 2025 and 2026, recording 3.7% and 4.1%, respectively, and the growth of the Saudi economy will return to decline during 2027, recording 3.2%.

The average growth rate of the Saudi economy will reach 3% during the period from 2023 to 2028, according to the expectations of Fitch Solutions.

The International Monetary Fund had expected Saudi Arabia’s GDP growth to slow to 2.1% in 2023, under pressure from the oil production cuts approved by the country.

The average inflation rate in Saudi Arabia will rise during the fiscal year 2023 to 2.3%, before declining to 1.2% during the fiscal year 2024.

Fitch Solutions expects that the average inflation rate in Saudi Arabia during the period from 2023 to 2028 will be about 2.1%.

Fitch Solutions expected the economy of the Gulf states to grow by 1.9% this year, affected by the oil production cut implemented by several countries in the region within an agreement of countries from the OPEC + coalition.

And last April, Saudi Arabia, the UAE and other producers from the “OPEC +” alliance announced sudden cuts in oil production exceeding one million barrels per day, in an effort to boost prices.

This is a noticeable slowdown in the growth of the economy of the Gulf countries, which grew by 7.6% in 2022, due to the rise in energy prices last year, according to Ramona Mubarak, Head of Risk Management in the Middle East and North Africa at Fitch Solutions.

She added, “Last January, we expected the economy of the Gulf states to grow by 3.4 percent, but with the decline in oil prices and production cuts initiated by some Gulf countries, we lowered our expectations to 1.9 percent.”

Ramona attributed these expectations to the importance of what the oil sector represents to the economy of the Gulf states.

And this June, the “OPEC +” alliance announced the extension of the oil production cut until the end of 2024.

The growth of the UAE economy

Fitch Solutions forecasts indicate that the growth of the UAE economy will increase during the years 2024 and 2026.

According to estimates, the UAE economy is expected to grow by 4 percent during the fiscal year 2024, 6 percent in the fiscal year 2025, and 6.6 percent in the fiscal year 2026, with an average growth rate over 6 years of 4.4 percent. ,

Ramona explained that the non-oil sector will support the growth of the UAE economy, as it represents about 60 percent of the economy, noting that the oil sector will also be supportive, with the UAE company ADNOC targeting the growth of its exports.

She said, “The UAE has implemented important reforms to improve the business environment, and has also launched a strategy to diversify its economy by 2031.”

Last year, the UAE launched the “We Are the Emirates 2031” strategy, which aims to raise the growth of gross domestic product, increase non-oil exports, and raise the contribution of the tourism sector to the domestic product.

According to the expectations of Fitch Solutions, the average inflation rate in the UAE will record 3.3 percent in the current fiscal year 2023, before declining to 2.4 percent in the next fiscal year, and 2.1 percent in the fiscal year 2025.

Expectations indicate that the average inflation rate within 6 years from now will reach 2.4 percent.