(MENAFN - Khaleej Times) With stability returning to other oil producing countries, the GCC will return to normal oil production levels and its gross domestic product, or GDP, growth will settle around 5.3 per cent, International Monetary Fund, or IMF, said on Wednesday.
The IMF said the GCC countries' GDP growth reached eight per cent last year as their oil production increased to compensate for oil supply decreases, the Washington based body said in its Regional Economic Outlook Update for Middle East North Africa, Afghanistan, and Pakistan, or Menap, region.
"Middle East oil exporters are benefitting from high oil prices, and we expect GDP growth to strengthen and become more broad-based this year. Nonetheless, fiscal vulnerabilities to falling oil prices have increased, and structural challenges remain, such as the need to create jobs for growing working-age populations and to further diversify the economies," said Masood Ahmed, Director of the IMF's Middle East and Central Asia Department.
The IMF official warned that 2012 is another challenging year for many oil-importing countries in the region, and in particular for those undergoing transition. "Growth is faltering and unemployment is on the rise, and many countries are faced with diminished policy space, having eaten into their foreign exchange and fiscal buffers in 2011. A joint and sustained effort is needed to help these countries navigate through this challenging period and set out an economic vision that is fair and inclusive," Ahmed said.
According to the report, Menap oil exporter benefited from high oil prices, which shielded them from the impact of the eurozone crisis and its amplifications. The GDP growth of these countries decreased in 2011 to four per cent but is projected to increase back up to five per cent in 2012. In 2011, the Menap oil exporters' combined external current account surplus almost doubled approaching 400 billion. "Continued government spending due to intensified social demands and higher oil prices, will support to the non-oil sector, which is projected to grow at 4.5 per cent in 2012," it said.
Dr Nasser Saidi, chief economist at DIFC, said it was inevitable that economic growth would be impacted as the transitions taking place across the region continue amid depressed global environment, even though the GCC and other oil exporters are continuing to benefit from high oil prices.
"Job creation is the clear economic and social policy priority and highlights the importance of having an inclusive agenda that supports and accelerates the growth of the private sector, notably SMEs and family businesses," he said.
He said the report also highlights the need for the effective mobilisation of funds and the channelling of resources to meet the growing infrastructure and capital investment needs of the region.