IMF cuts Saudi Arabia’s growth forecast

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The IMF has cut its forecast of real growth in the Saudi Arabian economy in 2016 by one full percentage point to 1.2 per cent in its World Economic Outlook (WEO) update report issued today.

The report said the pickup in global growth is weak and uneven across economies, with risks now tilted toward the emerging markets.

Advanced economies will see a modest recovery, while emerging market and developing economies face the new reality of slower growth, the report added

The WEO Update now projects global growth at 3.4 percent this year and 3.6 percent in 2017, slightly lower than the forecast issued in October 2015.

“This coming year is going to be a year of great challenges and policymakers should be thinking about short-term resilience and the ways they can bolster it, but also about the longer-term growth prospects,” said Maurice Obstfeld, IMF Economic Counsellor and Director of Research.

”Those long-term actions,” he continued, “will actually have positive effects in the short run by increasing confidence and increasing people’s faith in the future.”

The outlook says Saudi Arabia’s growth in real terms will be well below the 3.4 per cent figure estimated in 2015. Real growth in 2017 is now forecast at 1.9 per cent, a percentage point lower than the IMF’s previous forecast.