IMF says Saudi economy resilient despite Mideast war

The International Monetary Fund said Saudi Arabia’s economy has remained resilient during the Middle East war, while warning that future uncertainty could weigh on growth.

In the concluding statement of its Article IV consultation, the IMF cited what it called Saudi Arabia’s “strong macroeconomic fundamentals and diversified oil and logistics infrastructure.” It said the kingdom had shown “agility and resilience” despite the war that began in February with US and Israeli strikes on Iran and retaliatory attacks on Saudi Arabia and its neighbours.

The IMF said disruption around the Strait of Hormuz had “disrupted activity, curtailed trade, including oil exports, and dented confidence.” It said a recovery was expected once maritime traffic through the strait gradually returns.

“The outlook hinges critically on the evolution of the conflict, with risks to the downside,” the IMF said. It warned that continued disruption to shipping through the Strait could further restrict trade, weaken confidence and weigh on growth and diversification.

Yemen’s Iran-backed Houthi rebels last week announced a parallel maritime blockade of Saudi Arabia and hit Saudi tankers in the Red Sea.

Saudi Arabia has sought to diversify its economy through Crown Prince Mohammed bin Salman’s Vision 2030 programme. Some of its more expensive projects have recently been scaled back or scrapped to save costs, but the IMF said the plan had “strengthened the non-oil economy, expanded the role of the private sector, advanced economic diversification.”