The expected growth prospects of the MENA region strengthened, with predicted growth of 5.3 per cent in 2012 and 3.6 per cent in 2013, according to Qatar National Bank Group (QNB).
QNB attributed the strong forecast to higher oil prices and increased government spending, according to the bank’s group review of the International Monetary Fund’s (IMF) October World Economic Outlook, released on the occasion of the annual IMF meeting held this year in Tokyo.
Growth in the MENA region is two-fold; the gap in the growth outlook between exporters and importer has widened and moreover growth prospects for oil exporters have improved to 1.8 per cent more than the April forecast.
The prospects for oil importers have declined by one per cent however in the same time frame. Higher oil prices and increased government spending have been the key differentiating factors that have brightened the growth prospects for oil exporting countries. The outlook for oil importing countries remains subdued as political turmoil and change have led to declining economic activity.
Furthermore, the global economic outlook looks more downbeat as major world economies struggle with low real GDP growth. Global real GDP growth has been revised downwards to 3.3 per cent in 2012 and to 3.6 per cent in 2013.
GDP growth for advanced economies has dipped by around 0.5 per cent to 1.5 per cent in 2013.
“Implementing austere fiscal policies to reduce deficits” is one of the main factors of pushing the growth back,” QNB reported. The IMF has warned these austerity measures could impact sustainable long term growth.
Another key factor is the weak loan growth disbursed through the banking system due to risk aversion.
The QNB report read, “the US, the world’s largest economy, is now forecast to a reduced growth of 2.1 per cent in 2013.” It continued, “this is because of the external risks which are mainly posed by spillovers from the Eurozone debt.”
Other reason holding US growth back is domestic risk which emerge from a much larger fiscal contraction, as budget cuts and end of tax holidays come into play in early 2013.