The IMF is predicting that the economies of Morocco, Algeria and Tunisia will grow by more than the Middle East average during 1996. Growth will slow in Turkey and the economies of Saudi Arabia and Kuwait will continue to contract, according to IMF forecasts for this year.
The fund expects the Middle East’s gross domestic product (GDP) to grow by about about 3.5 per cent in real terms during 1996, which lags behind forecast global growth of around 4 per cent, but still represents an improvement on 1995. Regional inflation should slow to 6.5 per cent and the external current account should narrow to 1.5 per cent of GDP by 1997.
‘To realise these projections and strengthen their potential for achieving sustainable economic grow’th, all (regional) countries will need to address macroeconomic imbalances and structural weaknesses that have limited saving and investment.’ the IMP said in its World Economic Outlook for 1996.
Morocco should see the highest rate of growth with 9.1 per cent compared to a contraction of 6 per cent last year when the economy was hit by drought. Tunisia’s growth rate is expected to nearly double to 6.7 per cent and Algeria’s economy is predicted to grow by 5.8 per cent from last year’s 3.9 per cent. The fund sees the Egyptian economy also growing strongly at 4.8 per cent compared to last year’s 3.2 per cent.
The fund predicts the Turkish and Sudanese economies growing more slowly than 1995, while Kuwait’s will contract at a rate of 2.4 per cent, a rise of 0.3 per cent on the previous year.
Saudi Arabia’s economy is expected to shrink at a lower rate of 0.1 per cent, down from 0.8 per cent.
The report stressed the need for regional states to move faster on privatising state assets and broadening their tax bases, removing regulations that hinder external trade and, for oil exporters, doing more to diversify sources of income.