Oil exporters to grow less

31 de outubro de 2017

São Paulo – The Middle East and North Africa oil importing countries will grow more this year and the next than those in the region that export the commodity. Oil exporters are facing budget problems due to low oil prices, according to a report by the International Monetary Fund (IMF) on the region released this Tuesday (31). The report also includes Afghanistan and Pakistan and labels the region as MENAP.

The report brings an economic overview and states that the regional outlook for the region remains subdued due to low oil prices and local conflicts. It also states that the countries should drive their growth to establish more solid bases for their public finances, speed up reforms that create jobs and diversify their economies.

“Over the medium term, growth is anticipated to accelerate gradually in most MENAP economies, but it will remain below what is needed to tackle unemployment in the region and raise standards of living for all,” said Jihad.

Oil exporters in the region should see 1.7% growth this year and 3% next year, while the GDP of oil importing countries will reach 4.3% in 2017 and 4.4% in 2018, according to the IMF’s forecast. For the countries of the Gulf Cooperation Council (GCC), the expected growth is of 0.5% this year and 2.2 next year.

The Fund says that, despite the improvements achieved, oil prices have kept a huge fiscal deficit among many of the product exporters. According to the IMF, the budget deficit jumped from 1.1% in 2014 to 10.6% of the GDP in 2016. This percentage should be cut in half this year after a modest recovery in prices and the efforts by the countries to reduce their deficits.

The IMF points out, however, that since oil prices should remain at the price range of USD 50 to USD 60 for the barrel, exporters will need to carry on – and some to intensify – their efforts to cut the deficit. Early 2014, before the decline of prices, the oil barrel surpassed USD 100.

Regarding MENAP’s oil importing countries, the Fund states that they continue to fight with insufficient revenues and an increase in spending. Public debt is over 50% of the GDP in the majority of the countries, according to the IMF. The Fund suggests that they should concentrate in increasing revenues and spending cuts, while maintaining social spending and investments focused on growth.

All of the region’s countries should take the opportunity given by the strengthening of the global economy to implement reforms that can create jobs, says the Fund. “These countries need such reforms to tackle their already high unemployment and to absorb the over 26 million young people expected to enter the labor force by 2022,” says the IMF.

Governments play an important role in the strengthening of the private sector, improvement in the business environment, transparency, accountability of public institutions and access to credit, according to the IMF. The Fund also advises for enhancement of the education so the local workforce can be better prepared.

*Translated by Sérgio Kakitani