Economic growth in the Middle East, North Africa, Afghanistan, and Pakistan region is expected to be 1% this year, rising to about 3% in 2020, the IMF has forecast in its July 2019 World Economic Outlook Update.
The 2019 forecast is 0.5 percentage point lower than in April, largely due to the downward revision to the forecast for Iran (owing to the crippling effect of tighter US sanctions). Civil strife across other economies, including Syria and Yemen, adds to the difficult outlook for the region.
Partially offsetting these developments are improved prospects for Saudi Arabia’s economy—the non-oil sector is expected to strengthen in 2019 with higher government spending and improved confidence, and in 2020 with an increase in oil sector growth.
Separately, ACCA (the Association of Chartered Certified Accountants) and IMA (Institute of Management Accountants), in their 2Q analysis from the latest Global Economic Conditions Survey (GECS), say that volatile oil prices have dented economic confidence in the Middle East.
The GECS confidence index in the Middle East fell slightly in 2Q2019, but it remains well above the levels recorded through the second half of 2018 when the oil price fell sharply, and higher US interest rates had an impact.
The global poll of 1,162 accountants shows that confidence remains above the record low reached at the end of 2018, consistent with a modest global economic slowdown.
Ms Fazeela Gopalani, Head of ACCA Middle East, said, ‘It’s clear our economy is not immune from global pressures and influences. The US and China trade war has had an impact on the global stage, while reduced global demand for oil is a downside risk for oil producers. For the Middle East, the prospect of lower US interest rates is a move that would allow many countries in the region to ease their own monetary policy, and so that is a cause for optimism.’