Pipeline shutdown in Saudi Arabia prompts major GDP downgrade
Saudi Arabia’s economy faces challenges with oil export reductions and GDP contraction, but foreign reserves may help stabilize the currency. Discover more.
Saudi Arabia faces significant economic challenges following a pipeline shutdown, leading to a major downgrade in GDP forecasts. Oil exports are now projected at 2.4 million barrels per day for this year, down from previous estimates, with GDP expected to contract by 4.6%.
The downgrade translates to a 6.8% reduction in Saudi Arabia’s contribution to global oil supply, amounting to 230 million barrels by the end of 2028. Consequently, the oil sector is anticipated to contract by 17.5% this year, with a slower recovery expected in 2027, where GDP growth is now forecasted at 4.7% instead of 6.4%.
The current account deficit is projected to peak at 14.3% of GDP this year, while the government deficit is expected to reach 11.7%. Despite these challenges, foreign currency reserves are likely to provide a buffer, ensuring the stability of the Saudi riyal peg to the US dollar.
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