Saudi Arabia faces economic contraction as war woes mount

RIYADH, October 13 — The International Monetary Fund (IMF) has warned that Saudi Arabia, the world's leading oil exporter, is set to experience a significant economic contraction in 2023 due to mounting war woes in the region. The IMF's latest World Economic Outlook report predicts a 3.3 percent decline in the kingdom's GDP, driven by the ongoing Middle East war and the escalating conflict in Yemen.

The report, which was compiled before a deadly Houthi attack on Saudi Arabia's international airport, also highlights the regional impact of Iran's blockading of the Strait of Hormuz, a crucial shipping route for oil and gas.

The unrest in Yemen, which began in February with US-Israeli strikes on Iran, has intensified as the Houthis, backed by Saudi Arabia, resumed their civil war against the internationally recognized government. This conflict has led to a series of lethal attacks on key Saudi infrastructure, including oil facilities, tankers in the Red Sea, and airports. In recent days, the kingdom has intercepted a Houthi missile, while the group has claimed responsibility for targeting the airport, which remains suspended.

Houthi leader Mohammed Al Bukhaiti has warned the US against intervening, stating that the group will continue targeting American interests in the region to send a message to the crown prince. The IMF's report projects a regional economic contraction of 0.3 percent this year, compared to a projected 1.9 percent growth in 2022. The agency attributed the slowdown to the prolonged closure of the Strait of Hormuz, which the report predicts will reopen in 2027.

Despite its diversified export routes, Saudi Arabia remains vulnerable to the ongoing hostilities, with the pipeline shut down temporarily in September due to Iranian-backed attacks.