MENA growth in 2009 to slow to 3.9% - World Bank

Growth in the Middle East region is predicted to slow to less than four percent in 2009 as the global financial crisis and a decline in oil prices continues to bite, according to a new report.

The World Bank's 2009 Global Economic Prospects report suggests world growth will weaken to 0.9 percent next year with simultaneous recessions in the United States, Western Europe and Japan.

And it says the previously turbo-charged growth of the past decade in the developing world will also slow with the Middle East and North Africa (MENA) region growing by 3.9 percent in 2009, compared to 5.8 percent in 2008.

While a rise in oil and natural gas revenues to $200 billion helped drive growth in the oil-rich economies in 2008, next year might be a different story, added the report.

The biggest impact to developing countries will be from slowing investment growth, which is set to decline to 3.4 percent in 2009 from more than 13 percent in 2007.

Meanwhile, international trade volumes will fall by 2.1 percent next year, the first drop since 1982, the World Bank report said.

The Bank also said the global economic recession will cause both commodity prices and inflation to drop further, with oil prices seen averaging $75 a barrel in 2009, food prices easing by about 23 percent and metal prices to decline by 26 percent.

Still, commodity prices will remain well above the low levels of the 1990s because of growth in developing countries, it added.

While the UAE's GDP growth is expected to slow as well, it is expected to remain above 6-7 per cent, according to the UAE Ministry of Economy, much above the growth rates predicted elsewhere in the Mena region.

"With oil exporters facing diminished revenues in 2009 due to sharply lower oil prices, Mena regional growth is expected fall to 3.9 per cent in 2009," the World Bank.

"Growth among the oil exporters as well as the diversified economies is anticipated to fall to about 4 per cent in 2009."

The report added that a quick recovery in 2010 is possible, depending on how fast oil prices are pushed up to a so-called 'fair' price of $65-$75 per barrel.

The region's oil producers are expected to push for a cut in oil production at the Opec meeting on Dec. 17 to lift falling oil prices which fell to below $40 last week, less than six months from their record high of $147.

Hans Timmer, who is responsible for international economic analyses and forecasts at the World Bank, said a recession in developing countries was unlikely but the slowdown was still significant.

"You don't need negative growth in developing countries to have a situation that feels like recession," Timmer said.

"We estimate at the moment that potential growth on average in the developing world is something like 6.5 percent, so that means when you're growing at 4.5 percent you're growing at 2 percentage points lower than potential growth, which is a situation where you see closures of factories and increasing unemployment," he added.