The Middle East region should enjoy robust growth this year and next despite a weakening in oil prices that highlights a need to diversify revenue sources, the International Monetary Fund said Thursday, April 26.
The IMF, in the latest edition of its twice-yearly World Economic Outlook, predicted that the Middle East, Malta and Turkey would post economic growth this year of 2.9 percent, compared with 5.4 percent in 2000 and ahead of an estimated 4.6 percent in 2002.
While oil prices have fallen off the peaks reached in late 2000, they should remain relatively high in historical terms, according to the report. "Since the windfall gains from higher oil prices have in general been prudently used, the impact of somewhat lower prices in most countries is expected to remain manageable," the IMF said.
"Thus growth is projected to remain reasonably robust in 2001 and 2002." But the report nonetheless advocated a prudent fiscal policy, notably in countries such as Saudi Arabia and Israel that need to reduce government debt.
In the six-nation Gulf Cooperation Council, grouping Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates, authorities need to support income-diversifying efforts by removing constraints on foreign direct investment, strengthening labor markets and speeding up privatization.
The IMF found that Iran had enacted "a welcome program of reforms" — trade liberalization, privatization and the development of social safety nets — but concluded that bolder action could pay even greater dividends.
In Egypt, Jordan, Lebanon, Syria, the West Bank and the Gaza Strip, output last year increased 4.2 percent, with progress most pronounced in Egypt in response to broad-based economic reforms implemented in the mid-1990s, according to the IMF.
But it added that if Egypt, Jordan, Lebanon and Syria wanted to share fully in the globalization process, they had to carry out further reforms to their trade and investment policies.
In Israel, growth rebounded strongly in 2000 thanks to buoyant technology exports. But activity is expected to slow sharply this year in response to weaker domestic spending, a decline in tourist bookings and slower growth in exports. — (AFP, Washington)
© Agence France Presse 2001
© 2001 Mena Report (www.menareport.com )