(EnergyAsia, October 31, Friday) — The economies of the Middle East and Central Asia have continued to experience strong growth in 2008, outpacing global growth for the ninth year in a row, the International Monetary Fund (IMF) said in its latest regional economic outlook.
Growth is underpinned by high commodity prices, strong domestic demand, and also the credibility of regional economic policies. So far, the two regions have been largely resilient to the ongoing international credit crisis and the downturn in the US and other advanced economies.
“However, inflation has emerged as a key issue in the region, and is well above the average of all developing and emerging market countries,” said Mohsin Khan, the IMF director for the two regions, at a recent press briefing in Dubai.
“For 2008 we expect real GDP in the region to grow about 6.5%. In 2009, growth is projected to continue at a slightly slower pace, around 6%. This is still significantly higher than the global average.”
The IMF’s latest report covers 30 countries in the two regions, divided into three groups for analytical purposes: oil exporters, low-income countries, and emerging markets.
The oil exporters group comprise Algeria, Azerbaijan, Bahrain, Iran, Iraq, Kazakhstan, Kuwait, Libya, Oman, Qatar, Saudi Arabia, Syria, Turkmenistan and the UAE.
This group is expected to continue to expand in 2008 at about the same rate as in 2007, supported by oil prices that are still high relative to historical averages, and a pickup in oil production compensating for a moderate slowdown in nonoil activity. However, growth is expected to decelerate to 6% in 2009 as a result of the global slowdown and lower oil prices.
Low-income countries comprise Afghanistan, Armenia, Djibouti, Georgia, the Kyrgyz Republic, Mauritania, Sudan, Tajikistan, Uzbekistan, and Yemen. Growth in this group is expected to moderate to 7% due to the impact of rising international food and fuel prices during the first half of the year. The IMF said drought has affected agricultural output in Afghanistan, and winter weather-related electricity shortages have hit economic activity in Tajikistan.
Emerging markets include Egypt, Jordan, Lebanon, Morocco, Pakistan and Tunisia will likely enjoy strong growth in 2008, driven mainly by a surge in foreign direct investment, including from the Gulf Cooperation Council (GCC) countries. Other factors include a rebound in Morocco’s agriculture sector, and strong tourism in Lebanon. Growth in these countries is expected to slow in 2009 as the effects from the global slowdown take hold.
Inflation in the two regions are projected to rise to 15% in 2008, before easing somewhat in 2009 as world food prices drop. The main sources of inflationary pressures differ, however, across country groupings.