By Gavin Davids
International Monetary Fund projects regional GDP growth at 4% on average throughout the MENA region
The UAE’s economic outlook has been raised by the International Monetary Fund following the recent instability across the Middle East region, the latest World Economic Outlook report has revealed.
The positive outlook for the UAE is in sharp contrast to the forecasts predicted for the countries affected by protests and outbreaks of violence in the region.
According to data released by the IMF, the UAE is expected to see GDP growth of between two and four percent during the 2011 and 2012 period. In 2011, real GDP is forecasted to see a marginal rise to 3.3 percent from its 2010 level of 3.2 percent.
That figure is expected to rise further in 2012, with real GDP seen at 3.8 percent.
In an interview with Arabian Business last week, James Lewis, director of Investment and Leasing at Knight Frank Middle East, said that he expected the UAE, and Dubai specifically to benefit from the recent geo-political instability in the region, which in turn would fuel the country’s growth.
“[It’s] going to provide a much needed injection of people, of activity and I think that will propel Dubai and the UAE forward,” he said.
Regional GDP growth is projected to rise at four percent on average throughout the MENA region, with Qatar and Saudi Arabia leading the charge with projected growths of 20 and 7.5 percent respectively in 2011.
However, both countries are expected to see dips from these highs in 2012, with Saudi Arabia falling to three percent and Qatar dropping to 7.1 percent, far lower than its 2010 figures of 16.3 percent.
Qatar’s growth is expected to be underpinned by its continued expansion in natural gas production and large investment expenditure.
The Saudi Arabian government’s sizeable infrastructure investment is expected to fund the Kingdom’s growth in 2011.
However, countries like Egypt, Bahrain, Tunisia and Libya are all expected to see low expansion figures, or even contraction, due to the unstable political situation in these countries.
The IMF’s projection for Egypt’s in 2011 sees the Arab World’s most populous country’s real GDP fall to a mere one percent from its 2010’s estimates of 5.1 percent. A marginal recovery of four percent is predicted in 2012.
“Egypt’s GDP growth will fall significantly below the 5.5 percent registered in the second half of 2010,” the report said.
“This assumes a modest dampening effect on economic activity from the political turmoil: disruptions to tourism, capital flows and financial markets are expected to be temporary,” it added.
Tunisia follows a similar path, with real GDP falling to 1.3 percent next year, from 3.7 percent. However, growth of 5.6 percent is forecast in 2012.
Libya’s economic forecast was excluded by the IMF due to the current political instability wracking the country, the report said. However, it added that the disruption of oil production in Libya meant that oil production from other OPEC suppliers was likely to increase.