World Economy

World Economy to Grow 3.5%

World Economy to Grow 3.5%World Economy to Grow 3.5%

The International Monetary Fund (IMF) said it expects the global world economy to grow 3.5% in 2015, compared to 3.4% in 2014.

Global growth remains modest and unbalanced, with growth expectations reaching 3.8% in 2016, the IMF said in its report released Tuesday in Dubai, as part of its Regional Economic Outlook: Middle East and Central Asia.

“Although the region’s countries have made progress in implementing reforms, there is still more that can be done — not just to stabilize the economy but to raise economic prospects in a sustainable, inclusive manner,” Masood Ahmed, Director of the IMF’s Middle East and Central Asia Department, told reporters at a briefing in Dubai.

Moreover, he said, the recent intensification of conflicts in Iraq, Libya, Syria, and Yemen is undermining economic activity and dampening confidence, posing a significant risk to the region’s prospects.

Call for Action in Egypt

The IMF commended Egypt’s recent economic progress, but stressed that there are still many more “difficult” reforms needing implementation.

Egypt has recorded strong momentum, as shown in early results and growth figures this year, with a lot of investment proposals – some advanced and others in early stages, said Ahmed.

The director pointed to the success of the international economic conference held in April in Sharm El-Sheikh, and said the country’s economic growth can be sustained by the actions taken by the present government.

"However, there is still more difficult stuff to be done,” said Ahmed, “like spending, taxes, helping small businesses so they hire people and function effectively.”

While Egypt’s government has set the country on the right track, he said, the country may need support in the coming years, most likely from (P)GCC states.

UAE Growth to Decline

The IMF said that it expects real gross domestic product (GDP) growth for the UAE to decline to 3.2% in 2015 compared to 3.6% in 2014.

The fund predicted a 3.2% growth for 2016, the lowest for the UAE in 15 years. It is expected that consumer price inflation will retreat 2.1% against 2.3% in 2014, according to IMF statistics.

The IMF said it expects a general stability and recovery of the Middle East and North Africa (MENA) region as well as Afghanistan and Pakistan despite the oil price decline, regional conflicts and uncertainties following the Arab Spring.

Growth in MENA

A modest recovery is expected to continue in the MENA despite a slump in oil prices, raging regional conflicts, and lingering uncertainty of the post-Arab Spring transitions.

Despite a sharp decline in oil prices, growth in the oil-exporting countries is projected to remain steady at 2.4 percent in 2015, with inflation subdued. Faced with large oil revenue losses, most countries are expected to use accumulated financial buffers and available financing to cushion some of the impact on growth while gradually slowing their fiscal spending, so that they can share the now reduced oil wealth equitably with future generations and rebuild buffers for dealing with oil price volatility. Specific policy announcements would help reduce uncertainty about how medium-term fiscal consolidation plans will be carried out.

Although rising, economic growth rates remain too low to make a dent into high unemployment across the region, especially among the youth. Raising economic prospects in a sustainable and inclusive manner suggests the need for multifaceted structural reforms.

Jordan GDP Growth

The IMF projected that Jordan's Gross Domestic Product (GDP) will grow by 3.8 percent this year and 4.5 percent in 2016. According to the report, the inflation rate is expected to be around 1.2 percent in 2015, while it is forecast to reach approximately 2.5 percent in 2016.

Regionally, the report expected inflation to reach 6.9 percent and 6.5 percent in 2015 and 2016, respectively. According to the report, the budget deficit is expected to drop to 2.9 percent in 2015 and 1.5 percent in 2016. Regionally, the report expected the budget deficit to reach 7 percent in 2015 and 5.6 percent in 2016.

The report expected the current account deficit to stabilize at 7.6 percent this year, with a chance of dropping to 6.6 percent in 2016.