Oil exporting countries forecast for higher growth
Overall gross domestic product (GDP) in the Middle East and North Africa (Mena) region is expected to grow 2.9 per cent in 2013, rising to 3.8 per cent in 2014, according to the Washington-based Institute of International Finance (IIF).
The 10 oil exporting countries in the region that are monitored by IIF show growth of 3.2 per cent in 2013, with a forecast growth of 3.9 per cent in 2014, while the six non-oil exporting countries are expected to average 1.8 per cent growth in 2013 and 2.4 per cent in 2014.
Oil exporters are forecast to have average GDP surpluses of 6.3 per cent, with the average GDP surplus totalling 10.8 per cent in just the GCC countries. Oil importers on the other hand face deficits of 10.3 per cent in 2013 and 2014.
With high unemployment, persistent macroeconomic imbalances and challenging prospects, countries exposed to political tensions are expected to continue to struggle to achieve even modest growth, the IIF says.
In its World Economic Outlook, published in October, the IMF says growth of oil exporting countries this year is expected to reach only 1.9 per cent, a downward revision of 1.25 percentage points from April. That comes largely as the result of a slowdown in oil production in Iran.
Next year however, growth will likely increase to 4 per cent, due to a recovery in global demand and higher oil production in Saudi Arabia, Iraq, and Libya, according to the IMF. For oil importers it expects 2.8 per cent growth in 2013 and 3.1 per cent in 2014.
Growth is expected to pick up in 2014 with improved global conditions and a recovery in oil production. However, sustainable and equitable growth over the medium term depends on an improved sociopolitical environment and macroeconomic stability, increased economic diversification, and accelerated job creation, says the IMF.
The UAEs economy has already started picking up. The IIF raised its growth forecast for the emirates to 4.7 per cent due to higher than expected oil output in the first three quarters of this year. Non-hydrocarbon real GDP growth is forecast to accelerate from 4.1 per cent in 2012 to 4.6 per cent in 2013, driven by higher government capital spending in Abu Dhabi and continued growth in trade, tourism and transportation in Abu Dhabi and Dubai.
But despite the favourable near-term outlook, the institute has reservations about the renewed cycle of risk taking, as shown by the strong recovery in real estate and the sharp increase in equity market prices, says Garbis Iradian, deputy director, Africa and the Middle East at IIF.
IIF welcomes the recent plan of the Central Bank of the UAE that includes limits on banks exposure to real estate and government-related entities. Furthering structural reforms, strengthening federal institutions and GREs [Government Related Entity] corporate governance, and improving risk management practices are also important to reinforce the UAEs resilience to external shocks.
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