Latest IMF report on global growth . . .
The International Monetary Fund (IMF) published its report on October 5th, 2016 on the prospects for the world’s economies future, by forecasting the global Gross Domestic Product to be 3.1% this year and 3.4% in 2017 and as compared with an annual average growth rate of 3.8% during the six years to 2015, the world is according to this international institution going through a thin patch of growth in the coming year(s).
In effect, it holds that since recent growth has mainly been driven by the emerging economies, as spearheaded largely by China’s economy that grew at an average rate of 8.4% per year, it would be difficult for the world’s other economies to take off by themselves. Moreover, the IMF expects this country by 2021 to do no more than 6%.
With respect to the MENA region however, the IMF had not a different look. It goes on to elaborate that in 2016, low oil prices and deepening conflicts continue to weigh on the economies of the MENA region. Oil exporters are facing another year of heavily reduced oil export revenues, and require ongoing fiscal consolidation and reforms to cope with these losses and to diversify their economies away from oil. Oil importers are experiencing uneven and fragile growth, and need to adjust to the challenges of spill overs from their oil-exporting neighbours and the threat from conflicts.
Meanwhile, Focus-Economics, a UK based provider of economic analysis and forecasts for 127 countries in Asia, Europe, Africa and the Americas reported on October 5th, 2016 thus:
Economic Snapshot for the Middle East & North Africa
OPEC deal promises to bolster oil prices
Economic activity in the Middle East and North Africa (MENA) appears to have bottomed out in the second quarter following Q1’s dismal performance, which drove growth to decelerate to levels last seen in the trough of the financial crisis in 2009. GDP expanded an aggregate 2.1% year-on-year in Q2, which marked an improvement over Q1’s 1.9% growth. Taking a closer look at the region’s economies individually, oil-importing economies led the acceleration on the back of strong domestic demand in Israel due to the Central Bank’s ultra-loose monetary policy and solid gains in the labor market. Growth in Tunisia accelerated due to resilient manufacturing output, while activity in Morocco decelerated as a harsh drought hit agricultural output.
Dynamics among oil-export-driven countries deteriorated in Q2. The uptick in oil prices in that quarter, coupled with stronger production in some countries, was not enough to make up for the losses accumulated since oil prices started to fall in the second half of 2014. Ballooning fiscal deficits led to the introduction of severe austerity measures in some countries, while financial conditions tightened as most governments decided to tap their domestic markets to finance their fiscal gaps. This situation, at different scales and intensity, hit economic activity in both the private and the public sectors.
In an attempt to prop up oil prices and rekindle growth among battered oil-export-driven economies, the Organization of the Petroleum Exporting Countries (OPEC) reached a preliminary deal to cut oil production on the sidelines of an energy conference held on 26–28 September in Algeria. The accord, which marks the first time OPEC has decided to trim production in eight years, includes the reduction of OPEC’s aggregated oil output from around 33.2 million barrels per day (mbpd) in August to a range of between 32.5–33.0 mbpd. However, oil prices failed to rally significantly following the announcement as there are still some hurdles to overcome. The absence of guidelines on specific country quotas and mechanisms to ensure that all parties stick to the deal threaten to derail the final agreement, which is scheduled for 30 November. Other factors will likely play an important role during the negotiations, including whether or not Russia participates in the accord; the expected ramp-up in oil production in Libya and Nigeria following severe supply disruptions; and the ongoing mistrust between the two regional powers Iran and Saudi Arabia.
Read more in the original Focus Economics document.
