(MENAFN- The Peninsula) The International Monetary Fund (IMF) has increased its economic growth projections for Qatar, Saudi Arabia and the UAE, but lowered those of Kuwait, whose economy contracted by 0.4 percent last year.
In its semi-annual World Economic Outlook released yesterday, the IMF said the Middle East and North African (Mena) region would grow by 2.6 percent this year, compared with 3.2 percent forecast in April. The Fund lowered its economic growth forecasts for most Arab countries over unrest in the region but said growth would remain generally strong in the oil-rich Gulf states.
And even though the figure for next year is seen as higher, it was cut from 4.5 percent to 3.8 percent. "With increased strife in some countries in the region, the projected pickup in growth in 2014... is now projected to be weaker relative" to the April forecast, the IMF said.
"Growth is expected to increase in 2015, assuming that security improves, allowing for a recovery in oil production, particularly in Libya," it said.
The most spectacular drop is expected in Iraq, whose economy is being hit hard by the conflict between a US-led coalition and the Islamic State group. The IMF now expects growth to contract by 2.7 percent this year after it was forecast to grow by a whopping 5.9 percent. And oil-dependent Iraq is seen growing only 1.5 percent next year, compared with 6.7 percent projected in the
April report.
For oil exporters as a whole - the Gulf states, as well as Algeria, Iraq, non-Arab Iran, Libya and Yemen - the IMF lowered 2014 growth forecast to 2.5 percent from 3.4 percent. And the outlook for 2015 was cut to 3.9 percent from 4.6 percent.
The IMF said growth in the six-nation Gulf Cooperation Council (GCC) states is projected to remain strong at an average 4.5 percent in 2014 and 2015. But it warned of oil price fluctuations due to weaker demand and increased non-Opec production, particularly from the
United States.
Among the non-GCC oil exporters, and excluding Iran, growth is forecast to average only 0.25 percent in 2014 given recent political shocks and deteriorating security. It is projected to recover to 3 percent in 2015, assuming a rebound in oil production in Iraq, Libya and Yemen.
"These assumptions are, however, subject to significant uncertainty," the IMF said.
A key priority for most of the oil exporters is to shore up weakening fiscal balances, the IMF said. The overall fiscal balance is projected to decline from 2.0 percent of gross domestic product in 2014 to 1 percent in 2015.
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