News - Middle East: The International Monetary Fund (IMF) projects Saudi Arabia to swing to a fiscal deficit of 1.2% of GDP in 2023, from a surplus of 2.5% in 2022, it said in its latest assessment report on Wednesday, Reuters reported.

This comes after the Saudi government had projected a budget surplus for the second consecutive year, although lower than in 2022.

Saudi Arabia’s economy grew 8.7% last year on the back of high oil prices, allowing it to record its first budget surplus in almost a decade. But cuts to production this year and lower prices are expected to hit oil revenues and weigh on growth.

On Tuesday, Saudi Arabia and Russia announced that they would extend voluntary oil production cuts until the end of the current year, despite market recovery and analysts' expectations of supply shortages in the fourth quarter, which led to price increases.

Meanwhile, forecasts indicate a sharp slowdown in GDP growth to 1.9% in 2023, according to the IMF, with non-oil GDP growth declining by 2.5% this year.

Non-oil GDP growth is expected to reach 4.9% during the current year.

The IMF expressed "positive expectations" in its report, with the continued momentum of non-oil GDP growth, despite the "uncertain" external environment. It added that risks to the outlook are balanced.