IMF projects the Saudi economy to continue strong growth in 2008

August 12, 2008

In a new report issued today, the International Monetary Fund (IMF) welcomed Saudi Arabia’s strong economic performance in 2007 and stated that the outlook for 2008 remains favorable.

According to the IMF, the Saudi economy is expected to grow 5 percent in real terms in 2008, up from 3.5 percent growth in 2007. The report also expects oil output to rebound to 9.2 million barrels/day with increasing growth in the non-oil sector.

In addition, a record current account surplus of $191 billion (35 percent of GDP) is projected for 2008 as a result of higher oil prices.

The IMF welcomed Saudi Arabia’s plans to expand oil production and refining capacity to support global market stability. It recommended that the Kingdom continue to invest in infrastructure, education and public services with the aim of diversifying the economy and encouraging job creation.

Also praised were Saudi efforts to liberalize the financial sector and the Kingdom’s substantial assistance to developing countries.

The report contends that the primary challenge facing the Saudi economy in the period ahead is inflation, which has been fueled by rising food import prices and infrastructure bottlenecks. It projects inflation in the Kingdom to peak at around 10.6 percent in 2008 and then ease in subsequent years.

The IMF assessment was released as a Public Information Notice (PIN), reports that are compiled within the framework of the IMF’s efforts to promote transparency of its views and analysis. With the consent of the country (or countries) concerned, PINs are issued after Executive Board discussions of general policy matters or Article IV consultations with member countries.

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