OECD revises Saudi Arabia’s growth outlook upward to 2.9% for 2023

Saudi Arabia remains one of the bright stops in the seemingly gloomy world economy as countries continue to battle high inflation and slowing demand. (Shutterstock)

RIYADH: Saudi Arabia’s economy is projected to grow at a higher rate than the global average as the Organisation for Economic Co-operation and Development revised the Kingdom’s economic growth outlook upward to 2.9 percent in 2023.   
This comes after the OECD in its March interim report projected the Kingdom’s gross domestic product to grow at 2.6 percent.   
According to the OECD’s latest Economic Outlook published on July 7, global GDP growth this year is projected to be 2.7 percent, the lowest annual rate since the global financial crisis, with a modest improvement to 2.9 percent expected for 2024.
“Falling energy prices and headline inflation, easing supply bottlenecks and the reopening of China's economy, coupled with strong employment and relatively resilient household finances, all contribute to a projected recovery. Nevertheless, the recovery will be weak by past standards,” noted OECD Chief Economist Clare Lombardelli in the report. 
Meanwhile, the OECD report projected Saudi Arabia to attain 3.6 percent GDP growth in 2024, slightly lower than the previous projection of 3.7 percent announced in March.   
Still, the Kingdom remains one of the bright stops in the seemingly gloomy world economy as countries continue to battle high inflation and slowing demand.    
With the OECD’s latest forecasts, Saudi Arabia surpassed the growth rate anticipated by the credit rating agency Moody’s Investors Service earlier in March.   
In its macro-outlook for G20 economies, Moody’s upgraded the Kingdom’s growth to 2.5 percent in 2023 from its previous forecast of 1.7 percent announced in November.   
For 2024, it raised the growth to 3 percent from the previous forecast of 2.6 percent.   
While the Kingdom’s growth forecast falls short of its 2022 projection of 8.7 percent, it remains one of the five countries to exceed the average global growth rate which is predicted to fall to 2.7 percent in 2023 from the last year’s projection of 3.3 percent.   
The growth rates of India, China, Indonesia and Turkey are also expected to exceed the global average in 2023 to reach 6 percent, 5.4 percent, 4.7 percent and 3.6 percent respectively.   
However, the OECD expects the world economy to pick up in 2024 to hit 2.9 percent.   
“This projected recovery, while almost unchanged from our interim projections in March, maintains the slightly more optimistic outlook that had been predicted and which we are now seeing materialize,” said OECD’s Secretary-General Mathias Cormann.   
These optimistic predictions are supported by the lower energy prices that are easing the strain on household budgets.   
The recovery of business and consumer sentiment and China’s reopening also boosted global activity, added the report.   
Cormann stressed that it is necessary that policymakers limit inflation and loosen up broad fiscal support via targeting effective fiscal measures.   
“While continuing to respond to the immediate economic challenges, it remains important to prioritize structural reforms to boost productivity, including by promoting competition, reviving investment, increasing female workforce participation and alleviating supply constraints, while securing the green and digital transformations of our economies,” he added.