(MENAFN- Khaleej Times) The International Monetary Fund, or IMF, on Tuesday raised its growth forecast for oil exporting countries in the Middle East and North Africa region to 6.6 per cent this year on the back of high oil prices and a strong rebound of activity in Libya.
However, the fund cautioned these oil economies against heavily boosting their expenditures as "substantial declines in the price of oil could heavily impact their fiscal positions".
The IMF, in its previous semi-annual review in April, projected a 4.8 per cent growth across the oil producing economies of the Mena region. In 2011, the economic growth of oil exporters was at 3.9 per cent.
The Mena region as a whole, including oil exporters and importers, is also is expected to grow at a faster rate of 5.3 per cent in 2012, compared with 4.2 per cent forecast in April and with 3.3 per cent recorded in 2011, the IMF said in its annual World Economic Outlook.
On Saturday, IMF chief Christine Lagarde praised Gulf oil exporters for their help in stabilising the global economy by managing oil prices.
"It gives me an opportunity to thank the GCC countries for their... stabilising role in the global economy because of the good monitoring and good management of oil prices," the IMF managing director said.
Lagarde was speaking at a news conference after meeting with senior officials of the GCC, which groups six wealthy oil-exporting countries - Saudi Arabia, the UAE, Qatar, Kuwait, Bahrain and Oman.
"Oil exporters will expand collectively at 6.6 per cent, compared with 3.9 per cent in 2011, thanks to a strong rebound by Libya after its economy came to a grinding halt during the 2011 revolt that ousted Muammar Gaddafi."
Oil importers, however, will see collective growth slow further to 1.2 per cent, compared with 1.4 per cent in 2011, as many countries face political and economic uncertainties as well as slowing growth in major trading partners," the IMF said. The Washington-based fund forecast that in 2013 Mena economies would see growth slow down to 3.6 per cent, with expansion in oil exporting economies dropping to 3.8 per cent, while oil importing economies widen their pace of growth to 3.3 per cent.
It has excluded Syria from the regional aggregate due to its 19-month conflict.
"Higher government spending in most oil exporters has supported robust growth," the IMF said.
"Elsewhere, uncertainties from political and economic change after the Arab Spring, slowing growth in major trading partners, and, in some cases, internal conflict have led to a marked weakening in activity," the IMF observed in its Economic Outlook.
Risks for oil exporters in the short term "revolve primarily around oil prices and global growth," the IMF said.
It warned public expenditure in those countries has "risen to such a degree that substantial declines in the price of oil could undermine fiscal positions."
"Despite significant accrued financial buffers, such declines could put at risk ongoing infrastructure investment and growth," it said.
However, the fund pointed out that tension with Iran over its nuclear programme and other geopolitical risks could lead to higher oil prices.
"Countries with little or no oil wealth have meanwhile suffered a drop in tourism and foreign direct investments due to uncertainty and unrest," the fund said.
Those countries remain "vulnerable to trade spillovers if downside risks to growth in major economies materialise," it said.
The IMF also warned an immediate concern over spikes in commodity prices would be the strain on budgets and foreign exchange reserves in countries that have extensive food and fuel subsidies.
The economy of Iraq is also forecast to maintain expansion, jumping from 8.9 per cent growth in 2011 to 10.2 per cent and 14.7 per cent in 2012 and 2013 respectively.
Economic growth in Saudi Arabia is exp2ected to ease from 7.1 per cent last year to six per cent this year and further to 4.2 per cent in 2013. In the UAE, growth will slow to four per cent this year and 2.6 per cent next year, compared with 5.2 per cent in 2011.
Kuwait's will also grow at a slower pace in 2012, expanding 6.3 per cent, compared with 8.2 per cent last year. Growth is expected to drop to just 1.9 per cent next year.
Sudan, which has been shifted to the category of oil importers following the independence of oil-rich South Sudan in July last year, is to see its economy contracting by 11.2 per cent this year.
Egypt's economy is expected to grow by 2.0 per cent this year and three per cent in 2013 after expanding by 1.8 per cent in 2011 despite political and security troubles.
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