Dubai: The International Monetary Fund (IMF) has forecast improved growth for hydrocarbon exporting countries, particularly the GCC, in its latest World Economic Growth Outlook (WEO) report. The lender, however, has warned of the weakening of economic recovery momentum across both developed and developing countries due to rising inflation and relatively lower progress with vaccinations in economically weak nations.
The IMF report observed that in the near term, commodity exporters, especially oil exporters, have brighter growth outlook. For the Middle East and North Africa region, in which world’s leading oil exporters are located, the fund has forecast an overall real GDP growth of 4.1 per cent for both 2021 and 2022.
The average growth outlook for GCC for 2021 is 2.1 per cent and for 2022, 3.68 per cent. The UAE’s real GDP is forecast to grow 2.2 per cent in 2021 and 3 per cent in 2022. Saudi Arabia leads in the growth forecast for GCC with 2.8 per cent growth this year and 4.8 per cent in 2022.
Analysts expect with the surge in oil prices, the public finances of oil exporters will continue to improve along with their current account balances, fiscal balances and net public foreign assets. According to an estimate by the Institute of International Finance, net public foreign assets of GCC will rise to about $3 trillion by end 2022, equivalent to 170 per cent of their GDP. In addition, foreign direct investment is becoming the main conduit for capital inflows, particularly into Saudi Arabia and the UAE.
While inflationary pressures are on the rise across both developed and developing nations, the IMF forecast for the current year shows the price rises across the GCC is gradual and modest. In the UAE, inflation is forecast at 2 per cent this year and 2.2 per cent in 2022. For the GCC as a whole, the inflation forecast for 2021 is in the range of 1.5-2 per cent and 2-3 per cent in 2022.