INTERNEWSTIMES.COM – The Kingdom of Saudi Arabia, long known for its oil-fueled prosperity, is facing a reality check as its economic outlook takes a hit. The latest pre-budget report from the Ministry of Finance reveals a significant slowdown in growth, with forecasts slashed and budget deficits projected to widen.
The kingdom’s real GDP growth is now expected to reach a mere 0.8% in 2024, a dramatic drop from the previously projected 4.4%. Growth projections for 2025 and 2026 have also been revised downward, to 4.6% and 3.5% respectively.
The reason for this gloomy outlook? A combination of factors, including the global slowdown in oil demand, increased global oil supply, and the kingdom’s ambitious spending plans for its Vision 2030 modernization program.
Saudi Arabia is pouring billions into projects like the World Cup 2034, Expo 2030, and the futuristic megacity Neom, all aimed at diversifying its economy and creating a future beyond oil. However, these ambitious projects are coming at a price, with the government now facing a budget deficit projected to reach 2.9% of GDP in 2024.
Even more concerning is the rising fiscal breakeven oil price, the price per barrel needed to balance the government budget. The IMF estimates this figure at $96.20 for 2024, a significant jump from previous years and significantly higher than the current price of Brent crude.
While Saudi Arabia has a relatively low debt level and a high credit rating, the widening budget deficit and the need to fund ambitious projects are putting pressure on the kingdom’s finances. The question remains: can Saudi Arabia navigate these economic headwinds and successfully realize its Vision 2030 dreams? (Red)
