By Staff writer
World Bank sees slowdown in Middle East's largest economy amid impact of OPEC oil output cuts
Growth in the Middle East and North Africa is projected to fall to 2.1 percent in 2017 as Saudi Arabia, its largest economy, is set to see further slowdown.
The World Bank said in its June 2017 Global Economic Prospects report that the adverse impact of Organisation of the Petroleum Exporting Countries production cuts on oil exporters outweighs modestly improving conditions in oil importers.
Growth is expected to pick up to 2.9 percent in 2018, assuming a moderation of geopolitical tensions and an increase in oil prices, it added.
The World Bank said growth in Saudi Arabia is anticipated to ease to 0.6 percent as a result of the production cuts, before accelerating to a 2 percent pace in 2018.
Iran is seen slowing to a 4 percent rate before accelerating modestly to a 4.1 percent pace in 2018 as limited spare capacity in oil production and difficulty in accessing finance weigh on the country’s growth, the report noted.
Globally, the World Bank forecasts that global economic growth will strengthen to 2.7 percent in 2017 as a pickup in manufacturing and trade, rising market confidence, and stabilising commodity prices allow growth to resume in commodity-exporting emerging market and developing economies.
Growth in advanced economies is expected to accelerate to 1.9 percent in 2017, while growth among the world’s seven largest emerging market economies is forecast to increase and exceed its long-term average by 2018.
Recovering activity in these economies should have significant positive effects for growth in other emerging and developing economies and globally, the report said.
It added that substantial risks cloud the outlook with new trade restrictions threatening to derail the welcome rebound in global trade.
World Bank Group President Jim Yong Kim said: “With a fragile but real recovery now underway, countries should seize this moment to undertake institutional and market reforms that can attract private investment to help sustain growth in the long-term. Countries must also continue to invest in people and build resilience against overlapping challenges, including climate change, conflict, forced displacement, famine, and disease.”
The report also highlights concern about mounting debt and deficits among emerging market and developing economies, raising the prospect that an abrupt rise in interest rates or tougher borrowing conditions might be damaging.
At the end of 2016, government debt exceeded its 2007 level by more than 10 percent of GDP in more than half of emerging market and developing economies and fiscal balances worsened from their 2007 levels by more than 5 percent of GDP in one-third of these countries.
“The reassuring news is that trade is recovering,” said World Bank chief economist Paul Romer. “The concern is that investment remains weak.”