Growth projections adjusted down
Geopolitical tensions cloud outlook
KUWAIT CITY, April 17: Growth projections for the GCC region have been subject to a modest downward revision, while the medium-term economic outlook for Middle East countries remains clouded by geopolitical tensions, according to the latest World Economic Outlook issued by the International Monetary Fund.
In 2017, Kuwait recorded a negative economic growth of minus 2.5 percent. Saudi Arabia also recorded a negative growth of minus 0.7 percent while Qatar experienced a two percent real GDP growth. UAE’s economic growth has been revised downwards to 0.5 percent in 2017 from a projected 1.3 percent in October last year.
For 2018, growth has been projected at a modest 2 percent, which is lower than the 3.4 percent forecasted last October. For 2019, the IMF sees a stronger rebound of 3 percent.
Growth in 2019 is expected to rise slightly to 1.9 percent as oil output increases.
Kuwait is projected to recover from a recession and report a positive growth of 1.3 percent in 2018, followed by a 3.8 percent growth in 2019.
In Saudi Arabia, growth is projected to resume this year, rising from a contraction of 0.7 percent in 2017 to 1.7 percent.
Qatar’s economy is projected to grow at 2.6 percent and 2.7 percent in 2018 and 2019 respectively.
Overall, for the Middle East, North Africa, Afghanistan, and Pakistan (MENAP) region, growth is projected to increase from 2.6 percent in 2017 to 3.4 percent in 2018 and 3.7 percent in 2019, and it is expected to stabilize thereafter at about 3.6 percent.
Growth in Egypt is projected to rise to 5.2 percent in 2018 and 5.5 percent in 2019 (0.7 and 0.2 percentage points higher, respectively, than in the October World Economic Outlook
report), reflecting stronger momentum in domestic demand and the effect of structural reforms.
Pakistan’s economy is expected to expand at a robust pace of 5.6 percent this year, up from 5.3 percent in 2017, before moderating to 4.7 percent in 2019.
According to IMF, there is a need for fiscal consolidation and structural impediments to keep growth modest. This need for fiscal consolidation as a result of structurally lower oil revenues, security challenges and structural impediments is weighing on the medium-term prospects of many economies in the region.
In this regard, chief economist at Abu Dhabi Commercial Bank (ADCB) Monica Malik said, “In line with the IMF, we see the higher oil price as a positive for the outlook of the GCC economies. The rise in oil revenues should be supported by governmental plans to increase spending and for confidence. Nevertheless, we still believe that an overall cautious approach and fiscal reforms will also dampen the pace of recovery in 2018.”
While the forecast for 2018 is unchanged relative to the October World Economic Outlook, for 2019, it has been revised down by 1.3 percentage points, partly reflecting an increase in macroeconomic vulnerabilities.