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The International Monetary Fund has revised Saudi Arabia’s economic growth upwards amid the unwinding of production cuts by Opec+ members.

The Arab world’s largest economy is forecast to grow 3.5 per cent this year, up from a previous projection of 3 per cent in April, and 3.9 per cent in 2026, an upward revision of 0.2 percentage points from the last prediction.

“Saudi Arabia’s economy has demonstrated strong resilience to shocks, with non-oil economic activities expanding, inflation contained, and unemployment reaching record-low levels,” the IMF said on Thursday.

Saudi Arabia is focusing on diversifying its economy away from oil with an emphasis on the development of sectors such as technology, property, tourism and infrastructure as part of Vision 2030.

The kingdom is supporting the development of several industries spanning different sectors to generate employment and help its non-oil economy to grow.

The country's non-oil economy is expected to grow by 3.4 per cent in 2025, after recording a 4.2 per cent growth last year after “the continued implementation of Vision 2030 projects through public and private investment, as well as strong credit growth, which would help sustain domestic demand and mitigate the impact of lower oil prices”, the Washington-based lender said.

Oil prices have remained volatile amid a number of events including the introduction of tariffs by Donald Trump, US-Iran nuclear talks and the conflict between Iran and Israel that ended earlier this week.

Unwinding of production cuts by Opec+ members including Saudi Arabia and Russia have also been affecting oil prices. Last month, Opec+ agreed to increase its monthly oil output at 411,000 barrels per day for July, following similar levels for May and this month.

“Over the medium term, domestic demand – including momentum ahead of Saudi Arabia’s hosting of large-scale international events – is expected to push non-oil growth closer to 4 per cent in 2027 before stabilising at 3.5 per cent by 2030,” the IMF said.

Saudi Arabia is set to host two major global events, Expo 2030 and Fifa World Cup in 2034.

The direct impact of rising global trade tension amid Trump tariffs is also expected to be limited on Saudi Arabia as oil products – comprising 78 per cent of Saudi Arabia’s goods exports to the US in 2024 – are exempt from US tariffs, while non-oil exports account for only 3.4 per cent of the kingdom’s total non-oil exports, the lender said.

In April, US President Donald Trump levied an import tariff of 10 per cent on all Gulf countries.

Saudi Arabia’s inflation levels would remain lower at around 2 per cent, supported by a credible peg to the US dollar, domestic subsidies, and continued supply of expatriate labour and economic growth, according to the IMF.

The overall fiscal deficit is also expected to narrow in the medium term, driven by spending efficiency measures, it said.

Source: THENATIONALNEWS

Source: AP

Federal Reserve Bank of Richmond President Thomas Barkin said Thursday tariffs are very likely to push inflation up over coming months, in remarks that said central bank policy is where it needs to be to deal with what lies ahead.

“I do believe we will see pressure on prices,” Barkin said in the text of remarks prepared for delivery before a gathering of New York Association for Business Economics.

When it comes to tariffs and their impact on price pressures, “to date, these increases have had only modest effects on measured inflation, but I anticipate more pressure is coming,” amid comments from businesses that they expect to pass at least some of the rise in import taxes imposed by President Donald Trump.

“That said, I don’t expect the impact on inflation to be anywhere near as significant as what we just experienced” during the pandemic and there are signs that consumers will try to move away from tariffed goods, which could limit some of the upsides for higher inflation.

Last week, the Fed’s most recent gathering of the rate-setting Federal Open Market Committee saw officials leave their overnight target rate unchanged at between 4.25% and 4.5%. Uncertainty over the outlook is keeping the central bank on the sidelines amid expectations the tariffs will push up inflation this year while depressing growth and hiring.

In his remarks, Barkin noted the Fed is facing risks on both its job and inflation mandates. Citing the uncertainty of the outlook Barkin declined to say where monetary policy is heading.

But he said, “given the strength in today’s economy, we have time to track developments patiently and allow the visibility to improve,” adding, “when it does, we are well positioned to address whatever the economy will require.”

Barkin said that as the economy now stands things look pretty good and recent inflation data was “encouraging.” He said job growth has been “healthy.”

Source: Yahoo Finance

The number of Americans filing new applications for jobless benefits fell last week, but the unemployment rate could rise in June as more laid off people struggle to find work.

Initial claims for state unemployment benefits dropped 10,000 to a seasonally adjusted 236,000 for the week ended June 21, the Labor Department said on Thursday. Economists polled by Reuters had forecast 245,000 claims for the latest week. The data included last week's Juneteenth National Independence Day holiday. Claims tend to be volatile around public holidays.

Technical factors as well as the start of the summer school breaks have accounted for some of the recent rise in claims, which have pushed them to the upper end of their 205,000-250,000 range for this year.

Non-teaching staff in some states are eligible to file for unemployment benefits during the summer holidays.

Nonetheless, layoffs have picked up and economists say President DonaldTrump'sbroad import tariffs are making it difficult for businesses to plan ahead.

The Federal Reserve has responded to the economic uncertainty by pausing its interest rate cutting cycle. Fed Chair Jerome Powell told lawmakers this week the U.S. central bank needed more time to gauge if tariffs pushed up inflation before considering lowering rates.

The Fed last week left its benchmark overnight interest rate in the 4.25%-4.50% range where it has been since December.

Still, layoffs remain historically low, accounting for much of the labor market stability. Hiring has, however, been lackluster, making it harder for many unemployed to find new opportunities.

The number of people receiving benefits after an initial week of aid, a proxy for hiring, increased 37,000 to a seasonally adjusted 1.974 million during the week ending June 14, the highest level since November 2021, the claims report showed.

The so-called continuing claims covered the week during which the government surveyed households for June's unemployment rate.

The elevated continuing claims have left several economists to expect that the unemployment rate rose to 4.3% in June from 4.2% in May. A survey from the Conference Board this week showed the share of consumers who viewed jobs as being "plentiful" dropped to the lowest level in more than four years in June.

"The rising volume of layoffs is likely to translate into an increase of at least one tenth of a percent in the national jobless rate in the June employment report," said Lou Crandall, chief economist at Wrightson ICAP.

Source: TradingView