By Bernd Debusmann Jr
Collectively, the economies of the Middle East and North Africa are also expected to contract 3.3 percent before rebounding to 4.2 percent growth in 2021
The UAE’s economy will rebound 3.3 percent in 2021 as the Gulf economies grow after contracting as a result of the global coronavirus, according to a new economic outlook from the International Monetary Fund.
According to the IMF’s World Economic Outlook, the UAE’s economy will contract 3.5 percent in 2020 amid the pandemic, but is expected to grow 3.3 percent in 2021.
Collectively, the economies of the Middle East and North Africa are also expected to contract 3.3 percent before rebounding to 4.2 percent growth in 2021.
Saudi Arabia’s economy is forecast to contract 2.3 percent in 2020, although non-oil GDP is expected to contract by 4 percent.
“The fast deterioration of the global economic outlook as the epidemic has spread and the breakdown of the OPEC+ agreement among oil suppliers have weighted heavily on commodity prices,” the IMF said.
In 2021, however, Saudi Arabia’s economy is expected to grow by 2.9 percent.
Regionally, this year’s economic performance will be the worst suffered since 1978, when a wave of unrest and strife lead to a 4.7 percent contraction.
With the exception of Egypt – which is expected to grow 2 percent - every country in the region will see GDP fall this year, the report added.
The IMF report – which was prepared before the OPEC+ agreement to cut almost 10 million barrels per day – said it expects oil prices to remain below $45 a barrel through 2023, about 25 percent less than 2019’s average.
“These developments are expected to weigh heavily on oil exporters with undiversified revenues and exports,” the IMF said, adding, however, that the trend will benefit oil importing countries in the region.
The IMF, however, noted that “extreme uncertainty” surrounds the forecast because of the difficulties in predicting a variety of factors, particularly the pathways of Covid-19 and the success of efforts to contain the disease.