The International Monetary Fund (IMF) has slashed its growth forecast for the Middle East and North Africa (MENA) region in its 2019 report: World Economic Outlook. According to the organisation’s survey released on Tuesday, economic growth for the MENA region is expected to be just 1.3 per cent this year, which marks a sharp fall from the previous estimate of 2.5 per cent made in October last year.
A Forbes summary of the 216-page report said that the growth rate of 17 of the 20 economies in the region was lowered. A combination of slower oil sector growth in some countries and geopolitical tensions and civil strife in others, were cited as reasons for slashing the forecast. Among the worst affected are oil exporters such as Iran, Iraq, Kuwait, Libya and Oman. Oil exports are expected to be just 0.4 per cent this year, which is a significant drop from the predicted 2 per cent growth forecast in October.
The slowdown forecast for the Middle East reflects a global downturn in the economy. The IMF downgraded its previous predictions for the world economy as a whole and suggested that there will be a decline of roughly 70 per cent in the world’s economies. It blamed “escalation of US–China trade tensions”, troubles in the “auto sector in Germany” plus “tighter credit policies in China, and financial tightening alongside the normalisation of monetary policy in the larger advanced economies.”
The story in the MENA region is more or less the same. Saudi Arabia’s growth, according to Forbes, has been downgraded from 2.4 per cent to 1.8 per cent, sticking with its forecast released in the interim January report. It has now also cut its growth forecast for Algeria, Iraq, Kuwait, Qatar and the UAE; these countries are now expected to grow by 2.3-2.8 per cent this year, compared to a previous range of 2.7-6.5 per cent.
Iran’s outlook is also said to be bleak. With renewed sanctions imposed by US President Donald Trump starting to bite, the IMF expects the country’s economy to contract by 6 per cent this year, compared to a previous prediction of 3.6 per cent.
Political problems in many of the countries are said to be a major issue. Libya, Syria and Yemen, which are all mired in conflict, are expected to see much slower recovery. Sudan, where there have been countrywide political protests recently, is the worst performing country in the region, while Mauritania with 6.4 per cent GDP growth is seen as the only bright spot.