IMF ‘is too pessimistic’ on Saudi economic prospects

IMF ‘is too pessimistic’ on Saudi economic prospects
The Kingdom had emerged from strict lockdowns imposed in March. (Shutterstock)
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Updated 01 July 2020

IMF ‘is too pessimistic’ on Saudi economic prospects

IMF ‘is too pessimistic’ on Saudi economic prospects
  • The IMF has predicted that COVID-19 lockdowns and the fall in oil prices would shrink the Saudi GDP by 6.8 percent this year
  • The risks to recovery came from a second wave of infection

DUBAI: Saudi Arabia does not share the International Monetary Fund’s pessimism about its economic prospects, the central bank governor said on Tuesday.
The IMF has predicted that COVID-19 lockdowns and the fall in oil prices would shrink the Saudi GDP by 6.8 percent this year, but that did not correspond with the views of the Kingdom’s independent experts, Saudi Arabian Monetary Authority chief Ahmed Abdulkarim Alkholifey said.
“The IMF forecasts are much more pessimistic than ours,” Alkholifey said. “The IMF must have its own reasons for reaching that. There have been big changes and huge modifications from the pandemic.”
He said the Kingdom’s own projection for 2020 was the responsibility of official statisticians, but the economy was down 1 percent in the first three months of 2020. “There certainly has been a recession, but there is no need to be that pessimistic,” he said.
The Kingdom had emerged from strict lockdowns imposed in March, economic activity had returned to pre-pandemic levels and retail sales had surged ahead of Wednesday’s increase in VAT, Alkholifey said.
The risks to recovery came from a second wave of infection, a deeper global slowdown, and geopolitical tensions, he said, and the main impact on Saudi business would be seen when the central bank’s multibillion-dollar support packages ended.
IMF Middle East director Jihad Azour said measures taken by Gulf states to mitigate the effects of the pandemic had been “acceptable” at about 2-3 percent of GDP, and capital flight was being reversed.