The World Bank has downgraded the growth forecasts it made in January for most of the Middle East as part of its June 2016 review of the global economy.

“Growth in the region is forecast to pick up slightly to 2.9 percent in 2016, 1.1 percentage points less than expected in the January outlook. The downward revision comes as oil prices are expected to track lower for the year, at an average of $41 per barrel,” said the World Bank’s Global Economic Prospects Report released on 7 June.

Despite the negative adjustment, the economic performance of the region is expected to improve in the second half of the year. “The main reason for the slight improvement in regional growth in 2016 is an expected strong recovery in the Islamic Republic of Iran following the lifting of sanctions in January. An envisaged upturn in average oil prices in 2017 is projected to support a recovery in regional growth to 3.5 percent in 2017,” said the report.

Most countries in the region have had their forecasts downgraded by 0.5-1.5 percentage points. The main exception is Iraq, which has had its growth forecast improved by 4.1 percentage points. A rebasing of Qatar’s GDP resulted in a 3.5 percentage point reduction in its growth forecast.

Globally, the World Bank has downgraded its 2016 growth forecast to 2.4 percent from the 2.9 percent it projected in January. It says the move is due to sluggish growth in advanced economies, stubbornly low commodity prices, weak global trade, and diminishing capital flows. Adding that commodity-exporting emerging market and developing economies have struggled to adapt to lower prices for oil and other key commodities.