Saudi Arabia faces economic contraction as war woes mount

Saudi Arabia, the world's leading oil exporter, is projected to experience a significant economic contraction in 2023, according to the International Monetary Fund's latest World Economic Outlook report. The kingdom's GDP is expected to decline by 3.3%, primarily due to attacks by Yemen's Houthi rebels and the ongoing blockade of the Strait of Hormuz by Iran.

The report, compiled before the deadliest attack on Riyadh's international airport in over a decade, highlights the mounting challenges for Saudi Arabia amid the Middle East conflict.

The ongoing civil war in Yemen, which began in February 2015 with Saudi-led coalition support against Houthi rebels, has further exacerbated the economic situation. The Houthis have targeted Saudi oil facilities, tankers in the Red Sea, and transport hubs, including airports. The kingdom's alternative export route via its East-West oil pipeline was temporarily halted in September after being struck by strikes allegedly carried out by Iran-backed groups in Iraq.

The IMF report projects a regional economic contraction of 0.3% this year, down from the previously anticipated 1.9% growth. The prolonged closure of the Strait of Hormuz is a key factor contributing to this decline. Despite these challenges, Saudi Arabia is relatively less affected by the regional economic downturn compared to other exporters, thanks to its diversified export routes.