IMF improves MENAs 2012 growth outlook to 5.3% on oil exporters.

By bne IntelliNews October 10, 2012
Economies in the Middle East and North Africa (MENA) are projected to expand at an average rate of 5.3% this year, the IMF said in the October edition of its World Economic Outlook revising up its forecast for the region from a 4.2% growth expected in April. Growth in the MENA region was relatively subdued at 3.3% in 2011 but is projected to expand at a more robust rate this year helped by oil exporters that will see their economic growth accelerating to 6.6% in 2012 from 3.9% in 2011 supported by strong government spending as oil prices remain at historically high levels. Iraq will the regions leader with a GDP growth projected at 10.2% in 2012. Qatar and Kuwait rank second with a GDP rise of 6.3% in 2012, followed by Saudi Arabia with a 6% growth. The IMF revised down Algerias growth for 2012 to 2.6% from 3.1% due to increased risk of degradation of the global economy. In contrast, the UAEs growth outlook was raised to 4% from 2.3%. The IMF said that short-term risks for oil exporters revolve primarily around oil prices and global growth. Specifically, government expenditures have risen so high that substantial declines in the price of oil could undermine fiscal positions. For the group of oil importers, the IMF revised down this years growth outlook from 2.2% to 1.2% triggered by lower estimates for Morocco (2.9% vs. earlier 3.7%) and Lebanon (2% vs. earlier 3%), as social unrest and weakened external demand, especially from Europe, led to steep declines in tourism and FDI. On the other hand, Egypt's economy is expected to gain speed to 2% in 2012, slightly up from the earlier IMF estimate of 1.5%, boosted by relative political stability. Likewise, growth was revised upwards for Tunisia (2.7% from 2.2%) and Jordan (3% from 2.8%). The IMF expects MENA economies to slow their growth to an average of 3.6% in 2013, with oil exporters seen expanding by 3.8% and oil importers by 3.3%. Overall, the MENA region faces serious policy challenges including securing economic and social stability and the need to place public finances on a sustainable footing through institutional and regulatory reform to stimulate private sector activity and support strong, inclusive medium-term growth, the IMF said.

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