The International Monetary Fund (IMF) has said it expects economic growth in the Middle East and North Africa countries to drop by 1 per cent to reach 2.9 per cent this financial year.
In a report released on Tuesday, the IMF pointed out that the reasons for this pessimistic outlook is mainly due to the decline in crude oil prices in the MENA oil-exporting countries, as well as the result of regional political conflicts.
If the predicted rates are true, the economic growth rate of Arab countries will increase from last year by about 0.3 per cent, with the growth rate for the majority of MENA countries stabilised at 2.6 per cent.
The countries that achieved the largest growth last year are Algeria, Bahrain, Iran, Iraq, Kuwait, Libya, Oman, Qatar, Saudi Arabia, the UAE and Yemen; a percentage described by the IMF as “less than expected and will keep the economies of these countries in a state of emergency.”
The IMF believes that oil-exporting countries should implement new programmes and plans to meet the reduction in crude oil prices and search for alternative financial incomes in place of oil.
The report pointed out that the expected growth rates during the current year in Saudi Arabia will not exceed the 3 per cent barrier, although the organisation expected economic growth in Saudi Arabia to exceed 4.5 perc ent in October last year.
IMF senior economist, Olivier Blanchard, said the drop in oil prices to its current levels is good for the global economy in general; stressing that “oil-importing countries” should take advantage of this decline by “cutting support to this sector and implementing development programmes for the poor and increasing wages”.
The MENA region contains about 55 per cent of world oil reserves; mainly concentrated in Saudi Arabia, which is estimated to hold 22.1 per cent of the world’s oil and surpassed only by Venezuela with 24 per cent of the global reserve.