ABU DHABI 15 April 2017: Arab economies are projected to grow by 2.3 per cent in 2017 as a result of the decline in growth rate of the Arab oil-exporting countries to 1.8 per cent.
This is due to the decline of oil production reflecting the commitment of these countries to the OPEC agreement to adjust production quantities to balance the world oil market, according to the latest forecast by the Abu Dhabi-based Arab Monetary Fund, AMF.
”The fiscal corrective measures and the anticipated increase in interest rates in several of these countries will continue to affect the growth levels in non-oil sectors.
Within this group, the growth rate of the GCC countries is expected to reach 1.7 percent in 2017 compared to 1.9 percent in 2016, while the economies of the other Arab oil-exporting countries are expected to grow by 1.1 percent compared to 1.6 percent last year,” said the AMF in its Arab Economic Outlook (AEO), said Wam.
On the contrary, the AEO noted, the expected improvement in the economic activities in Arab oil-importing countries will partially offset the decline in expected growth of those countries. The former group of countries is expected to achieve a relatively high growth rate, estimated at 3.9 percent this year, amid expectations of improved external demand due to the growth of the world economy and international trade. In addition, Arab oil-importing countries will also benefit from the positive impact of economic reforms adopted to support economic growth, the improved internal conditions and the emergence of some of these countries as regional hubs for trade and investment flows.
2018 Forecast
Regarding the growth forecast for 2018, the pace of economic activity in the Arab countries is expected to rise to 2.7 percent due to several positive factors driving growth. In oil-exporting countries, the growth rate is expected to rise to 2.3 percent in the light of the return of oil production to previous tracks and the anticipated increase in the global oil prices, albeit at a lower rate than expected this year.
These countries will also benefit from the gradual fading of the impact of fiscal corrective measures on the aggregated demand levels. The growth in some countries within this group will also be supported by the relative improvement in internal conditions.
The expected improvement in the economic performance of this group of countries will include both the GCC and other Arab oil-exporting countries, whose growth rate is expected to increase to 2.2 percent and 3 percent, respectively.
On the other hand, economic activities in Arab oil-importing countries will continue to improve, bringing the anticipated group’s growth rate to 4.1 percent next year due to the expected increase in external demand, which resulted from the gradual recovery of global economic activity. Economic growth rates in some of these countries will be supported by the positive results of the economic reform policies being implemented to overcome the existing economic imbalances.
”Unfavourable global economic developments have impacted the macro-economic performance of the Arab countries in light of the continuation of the sluggish recovery of the global economy, the outward of capital flows from developing and emerging markets economies, and the declining trend of oil prices,” the AEO noted.
By Rajive Singh