São Paulo – The Gross Domestic Product (GDP) of the Middle East and North Africa countries and Afghanistan and Pakistan will increase by a lower rate than expected in 2013 and 2014, according to the World Economic Outlook (WEO), released this Tuesday (8th) by the International Monetary Fund (IMF). The document assesses the current scenario and future estimates for the world economy on a regular basis. The growth estimates for the Middle East and North Africa and the world economy have been revised down from the last edition, issued in July.
According to the document, the Middle East and North Africa countries, plus Pakistan and Afghanistan, should see growth of 2.3% this year and 3.6% in 2014. In the WEO report released in July, the forecast was 3% in 2013 and 3.7% in 2014. The global growth forecast for 2013 dropped from 3.2% to 2.9%. The estimate for 2014 has also been lowered, from 3.8% to 3.6%.
To the Fund, the Middle East and North Africa countries, Afghanistan, and Pakistan should see lower growth than previously forecasted due to poor recovery of the world economy and weaker demand for oil, the region’s top export product. The estimates include Arab countries as well as non-Arab ones, like Israel, Iran, Afghanistan and Pakistan.
“Growth is expected to pick up in 2014, with improved global conditions and a recovery in oil production. However, sustainable equitable growth over the medium term depends on an improved sociopolitical environment and macroeconomic stability, increased economic diversification and accelerated job creation,” according to the document.
The report forecasts 1% decline in oil output across the region, especially due to decreased exports of the commodity in Iran, which is facing economic sanctions from the West, and in Libya, where a strike has shut down ports and production units. The document also forecasts a decline in Saudi oil production due to reduced demand.
With regard to oil importers in the region, the WEO warns of political instability in countries such as Egypt and Syria. The study claims that living standards in oil importing countries are not improving and unemployment rates remain high, and this contributes to social discontent.
Concerning oil exporting countries, the IMF forecasts that the GDP of Saudi Arabia should be up 3.6% this year, Algeria’s should be up 3.1%, the Emirates’ should be up 4%, Qatar’s should be up 5.1%, Kuwait’s should be up 0.8%, Iraq’s should be up 3.7%, and Iran’s should be down 1.5%. As to the GDPs of oil importing countries, the WEO forecasts that Egypt’s should be up 1.8%, Morocco’s should be up 5.1%, Tunisia’s should be up 3%, Sudan’s should be up 3.9%, Lebanon’s should be up 1.5%, and Jordan’s should be up 3.3%.
For Middle East and North Africa subdivisions, the IMF forecasts that the GDPs of oil exporting countries will increase by 1.9% this year, the GDPs of oil exporting countries will increase by2.8%, and the combined GDPs of the Maghreb countries (Algeria, Libya, Mauritania, Morocco and Tunisia) will increase by 2.7%.
Fragile recovery
The WEO forecasts less growth this year because the global economic recovery is weak and is at risk of becoming even more fragile. The IMF believes the economies of developed countries will be up 1.2% in 2013 and 2% in 2014, and hasn’t changed its expectations regarding these indicators as against the July report. The growth of emerging economies will be higher. However, inflation and unemployment pose a threat to growth.
“Emerging market and developing economies are projected to expand by about 5% in 2014, as fiscal policy is forecast to stay broadly neutral and real interest rates to remain relatively low. Unemployment will remain unacceptably high in many advanced economies as well as in various emerging market economies, notably those in the Middle East and North Africa,” according to the document. The WEO claims emerging countries must face challenges in the next few years: balancing consumption, removing barriers to growth – in which regard the study specifically names Brazil and India –, and controlling fiscal deficits and inflation.
Brazil to grow less
Just as Middle East and North Africa countries and some developed ones, Brazil’s growth forecasts have been revised. In the report released in July, the GDP growth forecast for Brazil was 2.5% in 2013 and 3.2% in 2014. The estimate for this year hasn’t changed, but next year it has been revised down to 2.5%, according to the Fund. It should be the lowest growth rate among Brics countries, a group also comprising Russia, India, China and South Africa, in 2014.
In order for the world economy to resume growing, the Fund advises Eurozone countries to promote and sponsor a banking union and repair their financial system; it suggests for the United States to raise their debt ceiling and avoid political impasses that threaten its fiscal policy; and proposes for Japan and European countries to promote reforms that will enable an increase in its production. For emerging countries, the IMF claims implementing structural reforms is a must in order for some countries to boost infrastructure investment and encourage growth.
*Translated by Gabriel Pomerancblum
