GCC faces sharp GDP contraction in 2020
IMF’s forecasts far more conservative than earlier this year
The Middle East’s oil exporting countries were hit the hardest by the double- whammy of the pandemic and the sharp decline in oil prices, the International Monetary Fund ( IMF) said. In its latest Regional Economic Outlook, it has forecast a real GDP contraction of 6.6 per cent for these oil exporters.
The IMF’s latest forecasts for the Gulf countries are far more conservative than its April update, when the expectation was for an aggregate negative growth of - 3.9 per cent.
“Weak oil demand and large inventories are likely to remain concerns for oil exporters,” said Jihad Azour, Director of the Middle East and Central Asia Department at the IMF. “And while Opec+ agreements helped stabilise oil prices, these are expected to remain 25 per cent below their 2019 average,”
Oil demand
The oil GDP is expected to contract by 7.7 per cent, reflecting the impact of OPEC+ agreements on production caused by sluggish external and internal oil demand. Non- oil GDP of the exporters is expected to contract by 5.8 per cent this year, mainly reflecting a collapse in the service sector.
Within the GCC, the IMF has forecast a 1.3 per cent real GDP growth for the UAE in 2021 after a 6.6 per cent contraction this year. Saudi Arabia, the largest economy in the GCC, is projected to contract by 5.4 per cent this year and move back into a positive of 3.1 per cent in 2021.
While Bahrain’s growth is forecast at 2.3 per cent next year, its economy could contract by 4.9 per cent this year. For Qatar, the contraction this year is forecast at 4.5 per cent and followed by rebound of 2.5 per cent.
Among the GCC oil exporters, Oman is forecast to remain in recession for the whole of this year and the next, with its GDP forecast to contract by 10 per cent and 0.5 per cent, respectively.