Download Press Release IMF updates its regional economic outlook for MENA

Press Release
IMF updates its regional economic outlook for MENAP
Growth spreads across MENA in 2012 despite the strain of historic
transitions
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GDP growth of regional oil exporters expected to pick up in 2012 to almost 5% after recording
4% in 2011
GCC continues to be regional growth driver with GDP growth projected at 5.3% in 2012
Average GDP growth of regional oil importers expected to recover to below 2.7% in 2012, from
2.2% in 2011
The financial support of the international community is critical for regional oil importers
Dubai, 2 May 2012: Hosted by the Dubai International Financial Centre (DIFC), the financial and
business hub connecting the region’s emerging markets with the developed markets of Europe, Asia
and the Americas, the International Monetary Fund (IMF) launched today its Regional Economic
Outlook Update for the Middle East North Africa, Afghanistan, and Pakistan region (MENAP).
The Outlook, titled “Middle East and North Africa: Historic Transitions under Strain”, takes into
consideration the near-term risks to the macroeconomic stability of the Arab countries which have
increased due to a combination of political transition, pressing social demands, and an adverse
external environment. While these risks were contained to some extent during 2011, faltering growth,
rising unemployment and continued fiscal and external pressures, IMF expects 2012 to be an equally
challenging year.
According to the report, MENAP oil exporters1 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 4% but is projected to increase back up to 5% in 2012.
In 2011, the MENAP oil exporters’ combined external current account surplus almost doubled
approaching US$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% in 2012.
As their oil production increased in 2011 to compensate for oil supply decreases, the GCC countries’
GDP growth reached 8% last year. As stability returned to other oil producing countries, the GCC will
return to normal oil production levels and its GDP growth will settle around 5.3%.
Masood Ahmed, Director of the IMF’s Middle East and Central Asia Department, said: “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.”
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Oil exporters: Algeria, Bahrain, Iran, Iraq, Kuwait, Libya, Oman, Qatar, Saudi Arabia, Sudan, the United Arab Emirates and Yemen
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Press Release
Dr Nasser Saidi, Chief Economist at DIFC commented: “As the transitions taking place across the
region continue, and with the depressed global environment, it is inevitable that economic growth will
be impacted, 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. It 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. A cooperative and formal financing solution is required and I believe it is an opportune time to
set up a dedicated Arab bank for reconstruction and development that could tailor solutions to the
needs of individual nations in MENA, while catering for regional infrastructure projects that would
support greater regional economic and financial integration.”
2011 was a difficult year for MENAP oil importers2. The social unrest and resulting decline in tourism
and investment as well as higher energy prices and slower global growth, weakened economic
activity and resulted in a decline in its growth to 2.2%.
With lingering concern over social instability and policy uncertainty, tourism―an important source of
jobs and foreign exchange receipts―and private investment are likely to slowly recover this year.
IMF expects the average real GDP growth for MENAP oil importers to increase slightly to 2.7% in
2012 with the main near-term downside risk being a potential large increase in oil prices which would
impact these countries’ external balances.
The IMF report also highlights the gross external and fiscal financing needs of MENA oil importers,
which are projected at about US$90 billion and US$100 billion in 2012 and 2013 respectively, and
the consequent need of a timely official financing.
Mr Ahmed added; “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.”
- Ends For further inquiries on DIFC, please contact:
Dubai International Financial Centre
Shaima Al Zarouni
PR Manager
Tel: +971 4 362 2432
[email protected]
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Brunswick Group
Dina Samhout
Tel: +971 4 446 6283
[email protected]
Oil importers: Afghanistan, Djibouti, Egypt, Jordan, Lebanon, Mauritania, Morocco, Pakistan, Syria and Tunisia
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Press Release
About the DIFC
The Dubai International Financial Centre (DIFC) is the financial and business hub connecting the region’s
emerging markets with the developed markets of Europe, Asia and the Americas.
Since its launch in 2004, DIFC, a purposely built financial free zone, has been committed to encouraging
economic growth and development in the region through its strong financial and business infrastructure.
Currently, DIFC's client base comprises over 800 active registered firms, including 21 of the top 30 global
banks, 8 of the top global money managers, 6 of the 10 largest insurers and 6 of the top 10 law firms in the
world. More than 12 thousand employees operate in an open environment complemented by international legal
and regulatory standards. DIFC offers its member companies benefits such as 100 percent foreign ownership,
zero percent tax rate, with no restriction on capital convertibility or profit repatriation. DIFC has its own
independent financial and ancillary services regulatory body, the Dubai Financial Services Authority (DFSA). It
also has the DIFC Courts, which is an independent common law judiciary based in DIFC with jurisdiction over
civil and commercial disputes in or relating to the Centre.
DIFC is built upon a modern legal, regulatory and physical infrastructure which makes it the destination of
choice for Financial Services firms establishing a presence in the region.
For further information, please visit our website: www.difc.ae, or follow us on Twitter @DIFC.
About the IMF Regional Economic Outlook
The Middle East and Central Asia Regional Economic Outlook (REO) is prepared biannually by the IMF’s
Middle East and Central Asia Department (MCD). The analysis and projections contained in the MCD REO are
integral elements of the Department’s surveillance of economic developments and policies in 30 member
countries. It draws primarily on information gathered by IMF staff through their consultations with member
countries.
The analysis in this report was coordinated under the general supervision of Masood Ahmed (Director of MCD).
The project was directed by Ratna Sahay (Deputy Director in MCD) and Paul Cashin (Assistant Director in
MCD).
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