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IMF forecasts 5% real growth in the Middle East region in 2022

Countries must press ahead with structural and energy subsidy reforms to strengthen growth prospects, IMF says

IMF forecasts 5% real growth in the Middle East region in 2022
[Source photo: Anvita Gupta/Fast Company Middle East]

The Middle East and North Africa region’s real GDP is expected to increase by 5% this year, up from 4.1% in 2021, according to the International Monetary Fund (IMF), as a multispeed recovery persisted in the first half of the year.

The IMF report on the area was released, with the current growth prediction for 2023 disclosed as 3.6%. 

The October 2022 Regional Economic Outlook (REO) for the Middle East and Central Asia region was officially released at an event co-hosted by the IMF and Dubai International Financial Centre (DIFC), a significant global financial hub.

Oil-exporting nations like the UAE might use the estimated cumulative windfall of roughly $1 trillion from crude producers for 2022–26 to continue investing in initiatives that foster future economic growth. 

The UAE is among the oil exporters whose external accounts are anticipated to improve substantially in 2022–2023 as long as energy prices remain significantly higher than in 2020–2021.

The majority of Gulf Cooperative Council (GCC) countries are anticipated to continue saving a sizeable portion of their oil profits, which will also lead to an improvement in primary non-oil fiscal balances. 

On the other hand, countries that import oil will experience a significant terms-of-trade shock, larger sovereign spreads, and reduced market access. However, the report noted that strong remittance flows and rising tourism receipts are helping to counteract possible challenges in some nations.

“In the near-term, the priorities for all countries are to maintain or restore price stability while protecting the vulnerable, respond to tightening global financial conditions while ensuring fiscal and financial stability, and ensure food and energy security,” said Jihad Azour, director of the IMF’s Middle East and Central Asia Department.

The IMF recommends countries mitigate the cost-of-living crisis, strengthen resilience and growth prospects, and press ahead with various structural reforms. This includes completing energy subsidy reforms and enhancing social safety nets that will be key to building resilience to future shocks.

The IMF continues to be strongly supportive in the area. Since 2020, it has provided $16.7 billion in finance to the MENA area and $42 billion in special drawing rights to increase the region’s reserve assets.

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