RTTNews - The International Monetary Fund in a report released on Tuesday said the outlook for the Saudi Arabian economy remains broadly positive, as the country faces the current downturn with stronger fundamentals.

The IMF expects the country's non-oil GDP, an appropriate measure of job-creating economic activity in oil-exporting countries, to grow 3.3% in 2009, supported by the country's fiscal policies. However, overall GDP is expected to contract by almost 1%, for the first time since 1999, due to lower oil production.

The global lender expects inflation to retreat to about 4.5%. Inflation, after accelerating in the first half of last year, slowed to 5.2% in April this year on a yearly basis, the IMF noted.

The fiscal and external accounts are projected to be in surplus, albeit at a much lower level, owing to a fall in oil revenues and the expansionary fiscal stance, the report added.

Meanwhile, the lender noted that the most important short-term challenge was to preserve financial sector stability and mitigate the domestic impact of the global recession.

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