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IMF expects the Egyptian economy to grow 4.5% in 2018 from 4.1% this year.
IMF expects the Egyptian economy to grow 4.5% in 2018 from 4.1% this year.

IMF Projects $160 Billion Deficit for (P)GCC States

Oil-exporters like Iran, the UAE and Qatar have had lower budget deficits in comparison to their GDP than Saudi Arabia, Iraq and Oman. That’s in part because Iran, for example, is less dependent on oil revenues than Saudi Arabia

IMF Projects $160 Billion Deficit for (P)GCC States

Middle East oil producers are bracing for continued pressure from lower oil prices, with the International Monetary Fund projecting cumulative budget deficits of $320 billion over the next five years, according to a new report released on Tuesday.
Approximately half of that amount—or $160 billion—will be sustained by energy-rich Persian Gulf Arab nations (Saudi Arabia, Kuwait, the United Arab Emirates, Qatar, Bahrain, and Oman) between 2018 and 2022, AP reported.
Still, the projection is significantly lower than the shortfall of $350 billion that these Arab states racked up since 2015, when oil prices plunged to their lowest in years. The IMF said economic growth in these countries bottomed out to around 0.5% in 2017.
A major diplomatic rift between four Arab countries and Qatar underway over the past several months has so far had limited impact on economic growth, though the IMF said the impasse could have an impact on investors' appetites in the region.
After the initial shock of the June 5 measures, the Qatari economy and financial markets are adjusting to the impact of the diplomatic rift, the IMF noted.
The IMF expects Egyptian economy to grow 4.5% in 2018 from 4.1% this year.
Conflicts in Yemen, Libya, Syria and Iraq are also having an impact on the region's overall economic outlook. In Yemen, for example, inflation shot to nearly 40% in 2015 and is projected to be nearly 30% next year.
The IMF has encouraged Mideast oil importers and exporters to reduce spending and find new sources of revenue by introducing new taxes and lifting subsidies.

Switch From Oil
The IMF advised energy-rich Persian Gulf Arab economies to speed up their diversification away from oil after projecting the worst growth for the region since the global financial crisis.
Oil exporters in the Middle East, especially the Arab states, have been hit hard by the collapse in crude prices which provided a major part of their finances.
Following the slump, the six Arab states undertook fiscal measures and reforms to cut public spending and boost non-oil revenues. As a result, economic growth has slowed considerably as the (P)GCC oil exporters posted huge budget deficits.
In its Regional Economic Outlook, the IMF projected (P)GCC economic growth at just 0.5% this year, the worst since the 0.3% growth in 2009 following the global financial crisis.
“It is the right time for (P)GCC economies to accelerate their diversification outside oil and to promote a greater role for the private sector to lead growth and create additional jobs,” said Jihad Azour, director of the Middle East and Central Asia at IMF. “Preparing their economies to the post-oil era is something that is becoming a priority for authorities all over the (P)GCC,” Azour told AFP.
Azour said the (P)GCC growth projections are mainly driven by the oil producers deal to cut output to bolster low crude prices which meant (P)GCC states pumped and exported less oil.

MENA Region
The IMF report also projected that the economies of oil exporters in the Middle East and North Africa—also including Iraq, Algeria, Libya and Yemen—would grow 1.7%, down from 5.6% the previous year. MENA oil importers, on the contrary, were expected to expand 4.3% this year, up from 3.6% in 2016, the report added.
Azour said the IMF was projecting flat growth this year for Saudi Arabia, but the non-oil sector was growing faster than expected. This was an indication “that the Saudi economy is bottoming up and it shows that the gradual implementation of the fiscal adjustment now is going to allow the Saudi economy to grow faster,” Azour said.
He estimated that Saudi Arabia and UAE could achieve a fiscal balance by between 2020 and 2022.
In the outlook report, the IMF said progress on these efforts has been uneven. Oil-exporters like Iran, the UAE and Qatar have had lower budget deficits in comparison to their GDP than Saudi Arabia, Iraq and Oman. That's in part because Iran, for example, is less dependent on oil revenues than Saudi Arabia.
The IMF's figures are based on assumed oil prices of about $50 a barrel through the end of this year and next, up from last year's average of $43.

 

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