IMF PROJECTS 3.3% CONTRACTION IN SAUDI ARABIA’S ECONOMY AMID HOUTHI ATTACKS
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Agency Report
The International Monetary Fund (IMF) has projected a 3.3 per cent contraction in Saudi Arabia’s economy this year as attacks by Yemen’s Houthi rebels and disruptions to oil shipments intensify economic pressure on the world’s largest oil exporter.
In its latest World Economic Outlook report released on Tuesday, the IMF also projected that the Middle East’s regional economy would contract by 0.3 per cent this year, a sharp reversal from its forecast of 1.9 per cent growth six months ago.
The fund attributed the regional downturn partly to the prolonged closure of the Strait of Hormuz, a critical shipping route for global oil and gas supplies.
The report was compiled before an attack on Saturday reportedly killed 13 people in Saudi Arabia, marking the country’s deadliest attack in more than a decade, during a series of Houthi strikes targeting Riyadh’s international airport.
Saudi Arabia has faced mounting economic pressure since the Middle East war began in February, when the United States and Israel launched attacks on Iran, prompting Tehran to restrict shipping through the Strait of Hormuz.
The resumption of Yemen’s frozen civil war in July has further heightened security concerns, with the Saudi-led coalition backing Yemen’s internationally recognised government against the Houthis.
The group’s attacks have targeted Saudi oil facilities, tankers in the Red Sea and transport infrastructure, including airports, threatening the kingdom’s energy exports and commercial activities.
Explosions were heard over Riyadh late on Monday, with the Saudi-led coalition saying it had intercepted a Houthi missile. The Houthis also announced another attack targeting the airport, whose operations remained suspended, according to the report.
Residents received a government alert warning of a “hostile aerial threat” before authorities announced the missile interception.
The Saturday attack prompted United States President Donald Trump to say he was considering joining Saudi strikes against the Houthis, following reports that he had previously rejected requests from Riyadh for assistance.
The Houthis warned Washington against intervening. Mohammed Al Bukhaiti, a member of the group’s political bureau, told AFP that the group would target American interests in the region if the United States became involved.
Bukhaiti said the campaign against Saudi targets was intended to send a message to Crown Prince Mohammed bin Salman “that he can no longer wage aggression against Yemen from a safe position”.
Saudi Arabia has supported Yemen’s internationally recognised government militarily since 2015 in a protracted conflict that has fuelled a severe humanitarian crisis in the impoverished country.
Despite the economic pressures, the IMF said Saudi Arabia was among the least affected exporters in the region because of its more diversified export routes.
The kingdom has relied on its East-West oil pipeline to transport crude to the Red Sea coast, bypassing the Strait of Hormuz and reducing its dependence on the strategic waterway.
However, the pipeline was temporarily shut down in September after it was hit by strikes blamed on Iran-backed groups in Iraq, highlighting the vulnerability of alternative export routes.
The IMF said it expected a significant regional economic rebound in 2027, based on assumptions that the Strait of Hormuz would reopen and shipping disruptions would ease.
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