Yemen12 October, 20263 min read
Houthis Deadly Attacks Squeeze Saudi Arabia’s Economy, IMF Projects 3.3% GDP Contraction
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IMF projects Saudi GDP to contract 3.3% this year due to Houthi attacks. War spillovers raise defense spending and widen Saudi budget deficit.
6 outlets told this the same way.
IMF Sees Contraction
Saudi Arabia is expected to face economic contraction this year as deadly attacks by Yemen's Houthis squeeze a country already suffering from the Middle East war, the IMF said in its latest World Economic Outlook report. The IMF projected Saudi Arabia's GDP to shrink by 3.3 percent, and it also projected a regional economic contraction of 0.3 percent this year due to factors including a longer closure of the Strait of Hormuz. The IMF report was compiled before 13 people were killed on Saturday in what the sources describe as the deadliest attack in Saudi Arabia in more than a decade, during a series of lethal Houthi strikes on Riyadh's international airport.
Saudi Arabia has faced headwinds from Iran's chokehold on Hormuz since the start of the Middle East war in February, and the restart in July of Yemen's frozen civil war has brought the fight to Saudi soil. The sources say the Houthis have targeted Saudi oil facilities, oil tankers in the Red Sea, and transport hubs including airports, with the Saudi coalition saying it intercepted a Houthi missile and the group announcing it had once again targeted the airport, whose operations remain suspended.
Airport Attack and Warnings
The Saturday attack on Riyadh's international airport killed 13 people, and the sources describe it as the deadliest attack in Saudi Arabia in more than a decade.
The sources say Saudi mobile phones received a government alert warning of a "hostile aerial threat" before the announcement of the interception.
Mohammed Al Bukhaiti, a political bureau member of the Houthis, told AFP that the Houthis would target American interests in the region, and he said the purpose was to send a message to the crown prince that "he can no longer wage aggression against Yemen from a safe position".
The sources also say former U.S. President Donald Trump said he was considering joining Saudi strikes against the Houthis after reports that he had reportedly rebuffed previous requests for help from the kingdom.
The sources describe the Houthis as claiming they had once again targeted the airport while the Saudi coalition said it had intercepted a Houthi missile, with air traffic remaining suspended.
War Costs and Budget Pressure
The Wall Street Journal, as relayed in the sources, described growing military and economic pressures facing Saudi Arabia in the wake of the war in Yemen, with rising defense spending and a widening budget deficit. The sources say the newspaper reported that Saudi officials admitted depleted stocks of interceptor missiles needed to counter additional attacks coming from Yemen, and it said parts of the capital Riyadh began to look like a battlefield. The Wall Street Journal report also said sharp rise in military spending and costs of repairing infrastructure, along with continuing repercussions of the confrontation, were piling financial burdens on the kingdom and draining funds designated for economic diversification projects.
In the sources that discuss Yemen's political response, a cabinet session addressed the crisis in the country due to ongoing escalation in southern states and discussed accelerating the cessation of hostilities and building state institutions. The sources say the government urged the international community to push for a ceasefire and to accelerate negotiations to end the conflict by 2030, while also discussing a reform program focused on building a modern, diversified economy and strengthening governance and anti-corruption efforts.