Gulf nations’ efforts for energy reforms hailed

20/10/2016 05:11 AST

The slump in oil prices and ongoing conflicts are taking a toll on Middle East, North Africa and Pakistan (MENAP’s) economic outlook says Masood Ahmed, IMF director for Middle East and Central Asia.

He noted that modest recovery in oil prices is unlikely to bridge budget deficit of GCC nations and governments will have to keep their momentum to diversify their respective economies.

Ahmed was speaking to journalists at the sideline of the IMF Regional Economic Outlook update in Dubai on Wednesday.

The regional IMF head said he appreciated the efforts of Gulf nations to introduce energy reforms and new taxation measures to generate revenues and reduce dependence on oil.

According to a section of a report on the Middle East and Central Asia Regional Economic Outlook indicates uncertainties arising from conflicts in Iraq, Libya and Syria, are weakening confidence.

The report whether states that oil importers are benefiting from lower oil prices, although declining remittances from oil exporters are partly offsetting these benefits. MENAP growth will be modest at three and half per cent this year, with little improvement expected in 2017.

Considerable uncertainty surrounds these forecasts, however, because of the fluctuation in oil prices and the threat of regional conflicts.

Structural transformations are needed across the region to raise medium-term prospects and create jobs. Ongoing adjustment to cheaper oil despite recent increases, oil prices—the key driver of the outlook for MENAP oil exporters—are projected to remain low over the coming years.

Economic activity in the GCC region is projected to slow this year despite continued expansion in hydrocarbon output.

Fiscal tightening and declining liquidity in the financial sector are projected to reduce non-oil growth in the GCC to 1¾ percent in 2016, down from 3¾ per cent last year. GCC non-oil growth is projected to pick up to 3 percent next year as the pace of fiscal consolidation eases.

Over the medium term, less fiscal drag and a partial recovery in oil prices are projected to raise GCC non-oil growth to 3½ percent, well below the 7 percent average during 2000–14.

The Gulf Today