“Despite the series of global shocks, the MENA region’s growth rate picked up once more last year,” said the director of the IMF’s Middle East and Central Asia department, Jihad Azour.
Speaking at a press conference in Washington as part of the Spring Meetings of the World Bank Group and the IMF, Azour said real GDP in the region grew by 5.3 percent. , reflecting strong domestic demand and a rebound in oil production. “However, growth is expected to slow this year to 3.1% due to tight policies aimed at restoring macroeconomic stability, production cuts agreed by OPEC+ and spillovers from the recent deterioration in global financial conditions,” he said. he noted.
The growth rate of oil-exporting countries is expected to fall from 5.7% last year to 3.1% in 2023, with the focus on non-hydrocarbon activities, which remain the main driver of growth.
Growth in emerging markets in the MENA region is expected to decline from 5.1% last year to 3.4% this year, while low-income countries are expected to experience a growth rate of 1.3% this year, as they grapple with high commodity prices and macroeconomic difficulties, the IMF official said.
These projections reflect developments prior to the OPEC+ oil production cuts announced a few weeks ago, he added.
OPEC+ members surprised the market and indicated that they will make voluntary oil production cuts of 1.16 million barrels per day from May to the end of this year.
Voluntary production cuts by some members of the OPEC+ crude producer group are expected to further tighten the oil market from May and push prices higher.
“These cuts will lower growth in the GCC region, but will have a positive effect on the fiscal and external positions, as higher oil prices will offset the impact of lower growth,” Azour said.
After surging last year, inflation in the region is expected to remain unchanged at around 15% this year before declining slightly in 2024, he said.
Regional banks have not been overly exposed during the recent global financial market turmoil, Azour noted.
“So far, the spillover to banks in the region has been limited, reflecting no direct exposure to Silicon Valley Bank and limited exposure to Credit Suisse,” he said.
However, an escalation of the war in Ukraine might lead to high volatility in the commodity market, fueling additional inflationary pressures in the region and amplifying the risks of social unrest, the IMF official said.
“Monetary policy should focus on maintaining or restoring price stability,” advocated Mr. Azour.
“Bank supervisors should ensure that banks have governance and risk management commensurate with risk profiles, including capital and liquidity stress tests,” he added. .
“Structured reforms must be accelerated to support potential growth and build resilience, inclusiveness and create social safety nets,” the IMF official stressed.
The IMF lowered its estimate of global economic growth for this year by 0.1 percentage point to 2.8%, compared to what it had previously forecast in January, the estimate being lower than the expansion of 3.4% recorded in 2022 and the historical growth average of 3.8% over the period 2000-2019.
