Oil Slide Weighs Heav­ily On MENA Growth Fore­cast


DUBAI (Dis­patches) - A mas­sive slide in the eco­nomic growth of Mid­dle East top oil ex­porters is weigh­ing heav­ily on the out­look for the en­tire re­gion, the In­ter­na­tional Mone­tary Fund (IMF) said on Tues­day.

“Fuel ex­porters are par­tic­u­larly hard hit by the pro­tracted ad­just­ment to lower com­mod­ity rev­enues,” the IMF said in its World Eco­nomic Out­look for Oc­to­ber.

Iran’s growth is fore­cast to slide to 3.5 per cent this year down from a strong 12.5 per cent in 2016.

Iraq’s econ­omy, which ex­pe­ri­enced healthy 11 per cent growth in 2016, is ex­pected to fall into neg­a­tive ter­ri­tory and shrink by 0.4 per cent this year.

The Saudi econ­omy, the largest in the re­gion, is fore­cast to end 2017 flat — down from 1.7 per cent growth last year.

Saudi Ara­bia, Iraq and Iran are the top oil pro­duc­ers and ex­porters in the Mid­dle East. Riyadh is the world’s top oil ex­porter.

Kuwait’s econ­omy is pro­jected to shrink the most among oil ex­porters, by 2.1 per cent, while the economies of the United Arab Emi­rates and Al­ge­ria will grow at a mod­est rate, the IMF said.

In all, the growth of MENA oil ex­porters Iran, Iraq, Al­ge­ria and the six Per­sian Gulf Co­op­er­a­tion Coun­cil states is fore­cast to end this year at 1.7 per cent from 5.6 per cent in 2016.

MENA growth as a whole is pro­jected to more than halve in 2017, from 5.1 per cent to 2.2 per cent, “on the back of a slow­down in the Is­lamic Repub­lic of Iran’s econ­omy after very fast growth in 2016 and cuts in oil pro­duc­tion in oil ex­porters”, the IMF said.

It pro­jected the price of oil to av­er­age $50.3 a bar­rel in 2017, higher than the pre­vi­ous year, but will re­main in the 50s un­til 2022.

Regional oil ex­porters have lost hun­dreds of bil­lions of dol­lars in rev­enue since crude prices be­gan to slump in mid-2014. As a re­sult, they have posted bud­get short­falls and some have re­sorted to painful re­forms. The IMF wel­comed Saudi Ara­bia’s re­form pack­age, al­though it has al­ready sent the king­dom’s econ­omy into the red in the first two quar­ters of the year.

In con­trast to these ex­porters, eco­nomic growth in oil-im­port­ing na­tions — which in­clude Egypt, Morocco, Su­dan and oth­ers — is fore­cast to im­prove to 4.3 per cent this year from 3.6 per cent in 2016, the IMF said.

The IMF had a bet­ter out­look for 2018, fore­cast­ing a re­bound in growth to 3.2 per­cent com­pared with just 3 per cent in its July out­look.

The ad­just­ment is due to stronger do­mes­tic de­mand in oil-im­port­ing coun­tries and an ex­pected rise in oil out­put.

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