Mid­dle East growth to slow as Saudi stag­nates

Muscat Daily - - FRONT PAGE -

Dubai, UAE – Eco­nomic growth in the Mid­dle East and North Africa (MENA) is fore­cast to slow con­sid­er­ably over oil prices as the Saudi econ­omy slides, the International Mon­e­tary Fund (IMF) said on Mon­day.

Af­ter a bet­ter than ex­pected per­for­mance with five per cent growth in 2016, the economies of coun­tries in the MENA re­gion as well as Pak­istan and Afghanistan will sub­side to just 2.6 per cent growth this year, it said.

Last year’s healthy re­gional eco­nomic per­for­mance was mainly at­trib­uted to Iran’s strong growth es­ti­mated at above 6.5 per cent be­cause of higher crude pro­duc­tion, the Wash­ing­ton­based IMF said.

In its World Eco­nomic Out­look up­date, the IMF low­ered eco­nomic growth of Saudi Ara­bia, the world’s top oil ex­porter, to just 0.1 per cent in 2017, down 0.3 per cent on its April pro­jec­tions.

This will be Saudi Ara­bia’s worst growth since 2009 when its econ­omy con­tracted by two per cent on the slump of oil rev­enues fol­low­ing the global fi­nan­cial cri­sis.

‘The re­cent de­cline in oil prices, if sus­tained, could weigh fur­ther on the out­look for the re­gion’s oil ex­porters’, the IMF said.

Af­ter re­cov­er­ing to over US$55 a bar­rel fol­low­ing a pro­duc­tion re­duc­tion agree­ment by pro­duc­ers, oil prices re­ceded on strong in­ven­tory lev­els and a pickup in sup­ply.

The IMF pro­jected that re­gional growth will re­bound to 3.3 per cent in 2018, how­ever. Saudi eco­nomic growth is also fore­cast to re­bound to 1.1 per cent next year, down 0.2 per­cent­age points on April pro­jec­tions, it said.

Saudi Ara­bia’s econ­omy, the largest in the re­gion, grew by 4.1 per cent and 1.7 per cent in 2015 and last year re­spec­tively.

MENA oil ex­porters have lost hun­dreds of bil­lions of dol­lars since the mid-2014 crash in crude prices, trans­form­ing huge sur­pluses into short­falls.

They have since im­ple­mented some eco­nomic re­forms that have in­cluded rais­ing fuel and power prices.

Gulf states, which earn more than 70 per cent of their rev­enue from en­ergy, have been post­ing bud­get deficits since oil prices fell.

The IMF pro­jected that re­gional growth will re­bound to 3.3 per cent in 2018

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