Saudi Arabia's 2024 economic growth forecast cut; UAE leads GCC

By Anant Chandak

BENGALURU (Reuters) - Saudi Arabia's economy will grow at a slower pace this year than previously predicted as oil prices drop from recent peaks, according to a Reuters poll which also showed the United Arab Emirates (UAE) expanding at the fastest clip in the region.

After growing 8.7% in 2022, Saudi Arabia's economy - the Gulf Cooperation Council's (GCC) largest - contracted 0.9% last year as crude oil prices dropped from a March 2022 peak of $139 per barrel to average around $82 in 2023.

With oil prices not expected to rise significantly this year economists now predict weaker growth for Saudi Arabia's oil-dependent economy.

The April 3-19 poll forecast the economy would expand 1.9% in 2024, a downgrade from 3.0% in a January poll.

"The slower expansion in the Saudi economy this year will be down to ongoing oil production curbs ... due to be maintained through Q2 at least. When looking at the non-oil sector, we hold a more bullish outlook," said Daniel Richards, MENA economist at Emirates NBD.

"GCC economies that will underperform will be those where the diversification away from the oil economy has been slower ... than in those economies where other sectors have gained in importance more."

The UAE's economy, expected to show strong performance in non-oil sectors, was forecast to expand 4.0% in 2024, an upgrade from 3.8% in January's poll.

If all forecasts are realised, that would see the economy grow faster than regional peers.

Growth expectations for Qatar, Bahrain, and Kuwait for this year were cut to 2.2%, 2.3%, and 0.6%, respectively, from 2.4%, 2.8%, and 1.8%.

The International Monetary Fund forecast growth in the Gulf region to average 2.4% in 2024, slightly lower than the Reuters poll prediction of 2.5%.

While tensions in the region are adding to a rise in global price pressures, the inflation outlook in the GCC is steady.

"Across the Gulf economies, we think there could be a slight bump to inflation profiles over the coming months, but nothing significant," said James Swanston, Middle East and North Africa economist at Capital Economics.

"We expect inflation to slow over the second half of this year and remain lower in the Gulf relative to other emerging market economies this year."

Inflation in the region was forecast to range between 1.3% and 2.8% in 2024, with the lowest in Bahrain and the highest in Kuwait. Saudi Arabia's inflation was expected to average 2.0% this year, with the rate in the UAE and Qatar projected at 2.4%.

(For other stories from the Reuters global economic poll:)

(Reporting by Anant Chandak; Polling by Devayani Sathyan; Editing by Hari Kishan and Mark Potter)