São Paulo – The countries in the Middle East and North Africa should grow less than expected in 2014 and 2015, and so should the world economy. The same holds true of developing countries such as Brazil and South Africa, but not of advanced economies. So says the latest World Economic Outlook (WEO) released this Tuesday (8th) by the International Monetary Fund (IMF).
The Fund believes the global Gross Domestic Product (GDP) will be up 3.6% this year and 3.9% in 2015; both rates are down 0.1% from the WEO revision issued in January. The GDP of Middle East and North Africa countries should be up 3.2% on average this year (down 0.1% from January) and 4.5% in 2015. The prior forecast for 2015 was 4.8%.
In a statement released alongside the WEO, IMF chief economist Olivier Blanchard said the beginning of the world economic recovery in October last year is not only “strong,” but also “broader.” Still, old risks and new challenges continue to threaten the world’s recovery from the 2008 crisis. The hazards listed by the IMF include high rates of indebtedness, high unemployment and concerns over emerging markets. New challenges include the risk of deflation in advanced economies and geopolitical tensions.
The document notes that advanced economies such as the United States, Japan, China and the Eurozone are driving global growth, but the challenge for emerging countries lies in growing despite domestic adjustments and scarcer credit.
“Many (emerging) economies need a new round of structural reforms that include investment in infrastructure, removal of barriers to entry in product and services markets, and in China, rebalancing growth away from investment toward consumption,” said Blanchard.
Arab growth
As per the report, oil output in Arab countries has declined, partly due to political instability in Libya, low growth in private investment and higher government spending stemming from conflicts and political transitions. Nevertheless, Arab economies are expected to grow this year, driven by higher exports and investment.
Concerning investment in the region, the WEO cites Qatar’s investment plan for hosting the 2022 World Cup, and the United Arab Emirates’ for hosting the 2020 World Expo, in Dubai. Still, the WEO posits that Arab countries, especially non-oil exporting ones, are plagued by high unemployment, high indebtedness and low competitiveness. The WEO’s calculations include the economies of Iran, Pakistan and Afghanistan, which are located in the Middle East but are not Arab countries.
The IMF forecasts growth of 4.1% in 2014 and 4.2% in 2015 for Saudi Arabia; 4.3% in 2014 and 4.1% in 2015 for Algeria; 4.4% and 4.2% for the United Arab Emirates; 5.9% and 7.1% for Qatar; 2.6% and 3% for Kuwait; 5.9% and 6.7% for Iraq; 2.3% and 4.1% for Egypt; 3.9% and 4.9% for Morocco; 3% and 4.5% for Tunisia; 2.7% and 4.6% for Sudan; 1% and 2.5% for Lebanon; and 3.5% and 4% for Jordan.
Slower growth in Brazil
The WEO has revised down its Brazilian economic growth forecast. The document names low private investment, low competitiveness and restricted domestic supplies as the reasons for 1.8% growth this year and 2.7% in 2015. The prior forecast was 2.3% in 2014 and 2.9% in 2015. The growth expectancy for Brazil is lower than the global rate and the estimate for emerging countries, which is 4.9% this year and 5.3% in 2015. The WEO forecast for China has been maintained at 7.5% this year and 7.3% in 2015.
*Translated by Gabriel Pomerancblum
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