Saudi Arabia faces economic contraction as war woes mount

Saudi Arabia, the world's leading oil exporter, is set to experience a significant economic contraction this year, according to the latest projections from the International Monetary Fund (IMF). The report predicts a 3.3% decrease in the country's GDP, a sharp reversal from the 1.9% growth forecasted just six months ago. The decline is primarily attributed to the ongoing conflict in Yemen and Iran's blockade of the Strait of Hormuz, a critical shipping route for Saudi oil and gas.

The IMF's forecast comes amid a series of Houthi attacks on Saudi territory, including a deadly assault on the country's international airport and oil facilities. These strikes have further strained Saudi Arabia's already precarious economic situation, which was already under pressure from Iran's blockade of the Hormuz Strait. The region is expected to see a further decline in economic growth, with the IMF projecting a regional contraction of 0.3% in 2022, down from the previously anticipated 1.9% growth.

The unrest has also prompted a potential escalation in tensions with the United States. Saudi Arabia has sought American intervention to counter the Houthis, but President Trump has reportedly not responded favorably to the kingdom's requests for help. Despite the challenges, Saudi Arabia remains one of the least affected oil exporters in the region, owing to its diversified export routes, including the East-West oil pipeline that bypasses the Hormuz Strait.

However, this pipeline was temporarily halted in September following attacks by Iran-backed groups in Iraq.