Divergent Economic Performance Continues Across the Middle East
The IMF’s Regional Economic Outlook for the Middle East and Central Asia, released November 11 in Dubai, projects growth in the Middle East and North Africa region at 5.1 percent in 2012, up from 3.3 percent in 2011 (see table).
Owing to higher oil prices and production, the region’s oil-exporting countries—Algeria, Bahrain, Iran, Iraq, Kuwait, Libya, Oman, Qatar, Saudi Arabia, the United Arab Emirates, and Yemen—are forecast to expand by 6.6 percent in 2012 before moderating in 2013.
But faced with a difficult external environment, growth among the region’s oil importers—Afghanistan, Djibouti, Egypt, Jordan, Lebanon, Mauritania, Morocco, Pakistan, Sudan, and Tunisia—will register just above 2 percent in 2012. In the Arab countries in transition, continued domestic disruptions are also holding back growth.
“The biggest challenge facing governments in the Arab countries in transition is how to manage the rising expectations of populations that are becoming increasingly impatient to see a transition dividend at a time when there are threats to near-term macroeconomic stability and the margin for policy maneuver is limited,” Masood Ahmed, Director of the IMF’s Middle East and Central Asia Department, told a press conference in Dubai.
Oil exporters’ economies are buoyant
The region’s oil-exporting countries are expected to post solid growth in 2012, largely on account of Libya’s better-than-expected post-conflict recovery. In the countries of the Gulf Cooperation Council, growth remains robust, supported by expansionary fiscal policies and accommodative monetary conditions, but is expected to slow from 7½ percent in 2011 to 3¾ percent in 2013 as oil production reaches a plateau.
The price of oil is expected to remain above $100 per barrel in 2012–13. As a result, the oil exporters’ combined current account surplus is anticipated to remain near its historic high of about $400 billion in 2012 (see Chart 1). This has helped governments to respond to growing social demands by increasing expenditure on wages and salaries, which rose dramatically in most oil exporters in recent years.
Although many of the oil exporters have accumulated reserves to withstand...
To continue reading
Request your trial