Dubai: The region’s oil importers saw a pickup in growth from 3 per cent in 2011-14 to 3.75 per cent in 2015. Growth is expected to remain around that level in 2016-17, based on the IMF’s assessment.
“Lower oil prices and improved confidence levels, owing to progress from recent reforms, have supported this recovery. However, security disruptions and adverse spillovers from regional conflicts and, more recently, lower remittances, trade, and financial assistance arising from the slowdown in the GCC, strain the outlook,” said Masood Ahmad, director of the IMF’s Middle East and central Asia department.
The effects of energy subsidy reforms, coupled with low oil prices, have helped to reduce government deficits to about 6.5 per cent of GDP in 2016 from a 2013 peak of 9.5 per cent. The report recommends additional fiscal consolidation measures — designed in a growth-friendly way — to put public debt on a sustainable path and preserve macroeconomic stability.
Despite this mild economic recovery, “medium-term growth prospects of the oil-importing countries are still insufficient to address their long-standing problem of high unemployment”, Ahmad said. The region’s unemployment rate remains high at 10 per cent, with youth unemployment reaching a staggering 25 per cent.
In the report, the IMF encourages policymakers in these countries to step up structural reforms that strengthen the quality of education, improve the functioning of labour and financial markets, and increase trade openness to help boost economic growth and create jobs.
