Oil output cuts pressure Mideast economic growth

WASHINGTON: A resilient China, rising commodity prices and sturdy financial markets are offering a sunnier outlook for the global economy and helping dispel the gloom that has lingered since the Great Recession ended.

That is the picture sketched Tuesday by the International Monetary Fund (IMF), which predicts that the world economy will grow 3.5 percent this year, up from 3.1 percent in 2016. The IMF’s latest out- look for 2017 is a slight upgrade from the 3.4 percent global growth it had forecast in January.

The IMF expects the US economy to grow 2.3 percent, up from 1.6 percent in 2016; the 19-country euro zone to expand 1.7 percent, the same as last year; Japan to grow 1.2 percent, up from 1 percent; and China to expand 6.6 percent, down from 6.7 percent in 2016.

Economic growth in most Arab oil exporters will slow this year following production cuts aimed at propping up energy prices, the IMF said.

In its latest World Economic Outlook report, the IMF cut its 2017 growth fore- cast for the region comprising the Middle East, North Africa, Afghanistan and Pakistan to 2.6 percent, down from the 3.1 percent projected in January.

“The subdued pace of expansion reflects lower headline growth in the region’s oil exporters, driven by the November 2016 Organization of the Petroleum Exporting Countries (OPEC) agreement to cut oil production,” the Washington-based IMF said.

It “masks the expected pickup in nonoil growth as the pace of fiscal adjustment to structurally lower oil revenues slows,” the IMF added, referring to measures to cut budget deficits.

Members of OPEC, mostly from the region, agreed last year to reduce output by 1.2 million barrels per day (bpd) from Jan. 1 for six months, to support crude prices that had shed half of their value since mid-2014.

One bright spot is gas-rich Qatar, which is expected to register 3.4-percent growth this year, compared with 2.7 percent in 2016. Kuwait’s economy, in contrast, is forecast to shrink by 0.2 percent.

In Algeria, the IMF sees economic growth of 1.4 percent this year, down from 4.2 percent last year. Growth is also predicted to slow sharply in Iran, to 3.3 percent in 2017, from 6.5 percent last year when it won a boost from the lifting of economic sanctions.

Iraq’s economy is expected to contract by 3.1 percent in 2017 after surging by 10.1 percent last year on the back of expanding oil exports after sharp contractions in the previous two years.

The overall figure for the region overshadows a faster pace in many of its oilimporting countries.

Morocco’s economic growth is forecast to jump from 1.5 percent last year to 4.4 percent this year, while Tunisia’s economy is seen expanding by 2.5 percent compared with just one percent the year before.

On the other hand, Egypt will see slower growth of 3.5 percent this year, compared with 4.3 percent last year.

The IMF, whose forecasts exclude war- torn Syria, noted: “Continued strife and conflict in many countries in the region also detract from economic activity.”

Meanwhile, a “broad-based recovery is expected to continue at a healthy pace” in Pakistan, the IMF said, forecasting growth of 5 percent this year, and 5.2 percent in 2018, “supported by rampedup infrastructure investment.”