The Washington-based IMF has cut its GDP growth forecasts for Saudi Arabia and the rest of the Middle East and North Africa region.

“In the Middle East, growth in Saudi Arabia is expected to be weaker than previously forecast for 2017 as oil production is cut back in line with the recent OPEC agreement, while civil strife continues to take a heavy toll on a number of other countries,” said the IMF in a statement with the update to its World Economic Outlook on 16 January.

GDP growth in Saudi Arabia is now expected to be 0.4 per cent in 2017 rising 2.3 per cent in 2018. The IMF’s early forecast in October 2016 was for 2 per cent growth in 2016 and 2.6 per cent growth in 2018. For the rest of the Middle East, North Africa, Pakistan and Afghanistan the IMF forecasts growth of 3.1 per cent in 2017 and 3.5 per cent in 2018 down from earlier forecasts of 3.4 per cent for 2017 and 3.6 per cent for 2018.

The forecasts are for real GDP, which does not take into account gains in revenue from rising oil prices. Instead, revenues decline because oil prices are constant and Saudi Arabia has committed to cutting production by 486,000 barrels a-day as part of an Opec agreement to cut production by 1.2 million b/d. Riyadh recently said it has cut production even further and output is now below 10 million b/d – down from a peak of about 10.6 million b/d in August last year.

In December, Saudi Arabia’s Finance Ministry forecast GDP growth of 2 per cent for 2017 in its 2017 state budget announcement.

The ministry added that the growth can only be maintained if its economic reform programme continues, and without reforms, the ministry estimates that growth can only reach 1.2 per cent.

Saudi Arabia’s GDP grew by 1.3 per cent in 2016.

In 2018 GDP growth is expected to reach 2.1 per cent and if the reforms don’t get implemented the growth will only be 0.9 per cent, said the finance ministry in its 2017 budget statement.