IMF: MENA Region Recovering with 4.5% Growth in 2010

The Middle East and North Africa region is growing out of its downturn at a good speed. Economic prospects across the region are quite diverse, shaped by different constellations of underlying forces, stated the International Monetary Fund (IMF) in its latest report “World Economic Outlook”.

There are several factors moulding the shape of the MENA region’s recovery. Pushing it forward are at least two forces. First, higher commodity prices and external demand are boosting production and exports in many economies in the region. Second, government-spending programs are playing a key role in fostering the recovery. In some economies, vulnerable financial sectors and weak property markets are holding it back (Kuwait, United Arab Emirates). The sluggish recovery in Europe is putting a damper on export growth, workers’ remittances, and tourism revenues in other parts of the MENA region (Morocco, Tunisia), although the latest data suggest that these flows are gradually improving.

Considering these and other factors, GDP in the Middle East and North Africa is projected to grow at 4½ percent in 2010, edging up to 4¾ percent in 2011. As in other regions, recovery prospects vary substantially across MENA economies.

• In the group of oil exporters, the strongest performer is Qatar, where real activity is projected to expand by 18½ percent in 2010, underpinned by continued expansion in natural gas production and large investment expenditures. In Saudi Arabia and Kuwait, GDP is expected to grow at about 3¾ percent and 3 percent, respectively, this year supported in both cases by sizable government infrastructure investment. In the United Arab Emirates, growth in 2010 is projected to be subdued at 1¼ percent, with property-related sectors expected to contract further.

• In the group of oil importers, Egypt’s GDP is projected to grow 5 percent in 2010 and 5½ percent in 2011, helped by stimulative fiscal and monetary policies. Morocco and Tunisia will continue to grow at rates of 3¼ to 4 percent in 2010 and 4½ to 5 percent in 2011, assuming exports, tourism, remittances, and foreign direct investment continue to improve.

There is substantial uncertainty about this outlook, with two key risks on the downside (click below to read more).

via Global Arab Network | IMF: MENA Region Recovering with 4.5% Growth in 2010 | Economics.

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