Saudi Arabia forecasts slower growth, budget deficit for 2023

Saudi Arabia has lowered its growth forecast and expects to post a budget deficit this year rather than an earlier projected surplus, a preliminary budget statement showed on Saturday.

The largest Arab economy expects real gross domestic product to grow by 0.03 per cent this year, the document released by the ministry of finance showed, compared with a previous forecast for growth of 3.1 per cent.

The document projected a budget deficit of 2 per cent of GDP, compared with an earlier projection for a 0.4 per cent surplus.

Saudi Arabia budgeted revenue and expenditure

Total revenue is now expected to be SAR1.180tn ($314.64bn) and government spending is forecast to be SAR1.262tn. An earlier projection put revenue this year at SAR1.130tn and spending at SAR1.114tn.

Saudi Arabia has sharply cut its oil production for what the world’s largest oil exporter says is meant to stabilise the oil market. Oil prices remain below last year’s average of $100 a barrel.

The document also projected the government would post a budget deficit of 1.9 per cent of GDP in 2024, 1.6 per cent of GDP in 2025 and 2.3 per cent of GDP in 2026. It said “limited budget deficits” would continue in the medium term due to expansionary spending policies and conservative revenue estimates.

Real GDP was projected to grow by 4.4 per cent in 2024, 5.7 per cent in 2025 and 5.1 per cent in 2026. Saudi Arabia’s economy grew 8.7 per cent last year on the back of high oil prices, allowing it to record its first budget surplus in almost a decade.