By Rachna Uppal
DUBAI, May 3 (Reuters) - Government-led reforms and the
growth of private investment in new sectors will help support
non-oil economic growth in Saudi Arabia amid an expected sharp
slowdown in overall growth this year, a senior IMF official
said.
The Saudi economy grew 8.7% last year, as high oil prices
boosted revenue and led to the kingdom's first budget surplus in
almost 10 years.
The IMF projects that Saudi GDP growth will more than halve,
to 3.1%, this year, in line with the forecast for Middle East
oil exporters. The forecast, however, is higher than the 2.6%
growth rate that the IMF projected in January.
Several OPEC+ member states, led by Saudi Arabia, the
world's top crude exporter, recently announced surprise cuts to
oil production from May, initially driving up global prices,
although global worries and an uncertain demand outlook are
weighing on prices.
"This year, with the implementation of the new OPEC+ quotas,
we expect the oil sector to slow down," Jihad Azour, director
for the Middle East and Central Asia at the IMF, told Reuters,
adding that the impact on the kingdom's budget depended on
prices.
"The drop in production will affect growth because output
will decline, but revenues could grow and this could have a
positive impact on both external accounts, the reserves, and the
budget deficit," he said.
"Clearly, the strategy over the last five to six years has
helped the Saudi economy, and also the public finances, to be
less dependent on the cycle of oil."
Saudi Arabia has embarked on an ambitious economic
transformation plan known as Vision 2030, investing billions to
diversify into sectors such as tourism, launch massive
infrastructure projects, and develop the financial and private
sectors.
"The size of the non-oil economy is growing and it's mainly
driven by the private sector," Azour said.
(Reporting by Rachna Uppal; Editing by Leslie Adler)
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