Recent attacks by the Houthi group on Saudi Arabia have not had a significant economic impact on the country. Jihad Azour, the regional director of the International Monetary Fund (IMF), stated that this impact is limited due to strong domestic demand and a robust public sector.
Current Situation of Houthi Attacks
The Houthi group has increased its attacks on Saudi Arabia in recent weeks, targeting oil facilities and airports. Saudi Arabia, the world's largest oil exporter, is facing challenges in delivering oil shipments due to Iran's blockade on the Strait of Hormuz and the maritime blockade declared by the Houthis. However, Jihad Azour emphasized that shipments continue despite these conflicts.
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Economic Forecasts
Azour also pointed to a decrease in hydrocarbon production in Gulf countries, stating that this year, the Saudi economy is expected to contract by 3.3% due to the impacts of the war between the United States and the Israeli regime with Iran. The IMF's regional report predicts that the overall economy of the region will decline by 4.8% by 2026.
However, the IMF expects to see economic growth of about 9.1% next year, although this growth is influenced by geopolitical tensions and stalled diplomacy between Washington and Tehran. On Thursday, Iran's Revolutionary Guard threatened to escalate the conflict if the U.S. military continues to accompany ships in the Strait of Hormuz.
Additionally, reports from American media and others indicate that Washington and the Israeli regime are preparing for a new wave of attacks against Iran, likely after the U.S. midterm elections on November 3. If conflicts resume and further damage occurs to infrastructure, Azour warned that costs will increase.
Azour further emphasized that our forecasts are based on an oil price that is higher than pre-war levels, but much lower if the region experiences further tensions. He added that the ability to attract investment and talent depends on stability and also noted that "the wounds will remain for several years," but "the fundamentals of the Saudi economy are strong."
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