(MENAFN- Khaleej Times) In its recently-published World Economic Outlook the IMF expects global growth to pick up only marginally in 2015 to 3.5 per cent from an estimated 3.4 per cent in 2014.
Dubai — The GCC is expected to grow by 3.4 per cent in 2015 despite lower oil prices as member countries have low levels of public debt that allow them to borrow cheaply to finance any short-term deficits in their budgets according to Qatar National Bank or QNB.
The QNB weekly report said the region is likely to be insulated from the fall in oil prices since most governments have made significant savings during the last oil boom in addition to the fact that in some GCC countries like Qatar and the UAE growth is mainly driven by large investments in the non-hydrocarbon sector.
The QNB growth projection falls short of a forecast by credit insurance company The Coface Group predicting average economic growth of 4.1 per cent in 2015 on the back of robust non-hydrocarbon activities and large budget surpluses.
While Qatar will see the strongest growth in the region over the next two years with its economy expanding by 6.7 per cent in 2015 the UAE is expected to grow by 4.2 per cent Saudi Arabia by 3.8 per cent Bahrain by three per cent Kuwait by 2.5 per cent and Oman by four per cent the Coface report said.
The International Monetary Fund had warned that an estimated oil export losses of $300 billion in 2015 or 21 percentage points of gross domestic product in the GCC would lead to a fiscal deficit even as the proposed hike in US rates is likely to tighten financial conditions in the region.
As a result current account surpluses are projected to decline this year to 1.6 per cent of GDP in the GCC.“Lower oil prices have weakened the external and fiscal balances of oil exporters including members of the GCC. Large buffers and available financing should allow most oil exporters to avoid sharp cuts in government spending limiting the impact on near-term growth and financial stability” said the IMF in a recent report.
In its recently-published World Economic Outlook the IMF expects global growth to pick up only marginally in 2015 to 3.5 per cent from an estimated 3.4 per cent in 2014. Global growth is expected to be driven by emerging markets which are projected to grow by 4.3 per cent in 2015.
Advanced economies are forecast to grow by only 2.4 per cent as the shadows of past crises continue to cloud the outlook.
The Washington-based Institute of International Finance or IIF has noted that a prolonged oil price slump would require GCC countries to realign their fiscal planning.
“Beyond the near-term GCC oil exporters may need to reconsider their spending plans and shift to fiscal consolidation to avoid a significant loss in foreign assets if the oil price slump is sustained. This could also provide an opportunity for reforms that would strengthen these countries’ long-term fiscal sustainability” said George T. Abed senior counsel and director of the IIF.
Moody’s Investors Serviceechoing similar views has observed that lower oil prices would likely put an end to four years of large expenditure increases in the GCC as developments in global oil markets present policymakers with challenges and opportunities
—
Legal Disclaimer:
MENAFN provides the information “as is” without warranty of any kind. We do not accept any responsibility or liability for the accuracy, content, images, videos, licenses, completeness, legality, or reliability of the information contained in this article. If you have any complaints or copyright issues related to this article, kindly contact the provider above.