Abu Dhabi: The Arab Monetary Fund, AMF, said Arab economies are expected to grow by 2.8 per cent in 2015 and 3.5 per cent in 2016. The Fund revealed the numbers it in its September edition of “Arab Economic Outlook Report”, containing updated forecasts of economic growth and inflation rates for Arab countries in 2015 and 2016.
The report noted that world economic activity has not improved markedly during the first half of the year, contrary to what was anticipated by international organisations earlier this year. The modest economic performance is mainly attributed to several factors, the most important of which are the less than expected performance of the US economy, the continuation of worries about Eurozone economic recovery, the contraction of economic activities in the Commonwealth of Independent States due to geopolitical risks, and the slowdown of economic growth in many developing and emerging market economies, notably China and oil-exporting countries.
As a result, growth rate of world economy has been revised down to 3.3 per cent in 2015. On the other hand, international organisations expect world economic growth to increase to 3.8 per cent in 2016 due to improved economic prospects in both developed and developing economies. International trade is expected to grow by 4.1 per cent and 4.6 per cent in 2015 and 2016 respectively. Despite the recent gradual rise in international trade growth rates, they are still far below levels recorded before the international financial crisis, which were three times more than the current levels. On global oil markets, they are still influenced by the fragile economic recovery and the abundance of oil supplies, according to AMF. International oil prices, although improved relatively in the second quarter compared to the first quarter of the year, remain less than average prices registered during 2013 and 2014 by $50 and $40 per barrel respectively. Oil prices have risen by 20 per cent in the second quarter of 2015, compared to the first quarter. However, it resumed the decline during the third quarter of the year and lost previous gains in the light of concerns of global economic performance and the turbulence in a number of international stock exchanges in developed and emerging markets economies, as per the Fund’s report. Accordingly, international organisations expect oil prices to decrease by around 40 per cent in 2015 and to rebound by 9 per cent next year amid enhanced growth expectations.
The report further indicated that the aforementioned developments will reflect on global domestic demand, hence on the growth prospects of Arab economies in 2015 and 2016, where exports contribute about 53 per cent of the aggregated demand levels and oil receipts constitute around 68 per cent of the total public revenues for Arab countries as a group. As result of possible implications of the global economic environment, domestic economic developments seen in Arab countries throughout the year and based on the key assumptions of the report, AMF expects Arab economies to achieve a growth rate of about 2.8 per cent in 2015, reflecting improvement in growth prospects in some Arab countries and a weakening in some others.