CAIRO - Saudi Arabia has lowered its growth forecast and expects to post a budget deficit this year rather than an earlier projected surplus, a preliminary budget statement showed on Saturday.

The largest Arab economy expects real gross domestic product to grow by 0.03% this year, the document released by the ministry of finance showed, compared with a previous forecast for growth of 3.1%.

The document projected a budget deficit of 2% of GDP, compared with an earlier projection for a 0.4% surplus.

Total revenue is now expected to be 1.180 trillion riyals ($314.64 billion) and government spending is forecast to be 1.262 trillion riyals. An earlier projection put revenue this year at 1.130 trillion riyals and spending at 1.114 trillion riyals.

Saudi Arabia has sharply cut its oil production for what the world’s largest oil exporter says is meant to stabilise the oil market. Oil prices remain below last year's average of $100 a barrel.

The document also projected the government would post a budget deficit of 1.9% of GDP in 2024, 1.6% of GDP in 2025 and 2.3% of GDP in 2026. It said "limited budget deficits" would continue in the medium term due to expansionary spending policies and conservative revenue estimates.

Real GDP was projected to grow by 4.4% in 2024, 5.7% in 2025 and 5.1% in 2026.

Saudi Arabia's economy grew 8.7% last year on the back of high oil prices, allowing it to record its first budget surplus in almost a decade

($1 = 3.7503 riyals)

(Reporting by Enas Alashray and Hatem Maher; writing by Alexander Cornwell; Editing by Leslie Adler)