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Thu 21 Jan 2010 07:19 AM

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MENA economies to see 3.7% rebound - World Bank

Officials also predict 4.4% growth in 2011 but warn that some economic risks remain.

MENA economies to see 3.7% rebound - World Bank
WORLD VIEW: The World Bank says the Middle East will see recovery in 2010 but risks remain. (Getty Images)

Economic growth in the Middle East and North Africa, the world’s biggest net oil-exporting region, may rebound to 3.7 percent this year and 4.4 percent in 2011, the World Bank has said.

Growth will accelerate from an estimated 2.9 percent in 2009 after the global credit crisis sent oil prices tumbling, the Washington-based bank said in its Global Economic Prospects report on its website. Growth was 4.3 percent in 2008, the bank said.

“Stronger global activity should allow for crude oil and gas production to return to positive growth, implying moderate revenue gains,” the World Bank said.

The Middle East and North Africa account for more than a third of global oil production. Oil prices plummeted from a high of about $147 a barrel in July 2008 to a low of $34 a barrel in December of the same year.

Prices have settled into a range of $65 to $80 a barrel following output cuts by the Organisation of Petroleum Exporting Countries, the World Bank said.

Gross domestic product in Saudi Arabia, Kuwait, Oman and Bahrain, members of the Gulf Cooperation Council, contracted about 0.6 percent in 2009, compared with growth of 4.6 percent the year before, the report said.

Growth in the four countries may reach 3.2 percent this year and 4.1 percent in 2011, it said.

Growth in developing oil exporters - Iran, Syria, Algeria and Yemen - is expected to reach 3.1 percent this year and 3.7 percent in 2011, the bank said.

The economy of Egypt, the most populous Arab country, may grow 5.2 percent this year and 6 percent in 2011, the report said, from an estimated rate of 4.7 percent in 2009. The Lebanese economy is expected to maintain a growth rate of 7 percent through 2011, it added.

There remain “substantial downside risks, which would pose additional challenges to policy makers already grappling with the current crisis” in the region, the report said.

The risks include political tensions and the possibility of a deeper global recession, the report said. The debt crisis of Dubai World, one of the emirate’s three main state-owned business groups, indicates that “financial institutions in the region were not entirely unaffected by the global financial crisis,” the World Bank said.

Dubai World said on Nov. 25 that it would seek to delay repaying debt for at least six months, roiling markets in the Middle East and around the world.

The crisis may have an “adverse impact on the balance sheets of local and regional banks holding Dubai World debt,” the report said.

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