IMF: Regional conflicts to hit GCC non-oil expansion

The International Monetary Fund (IMF) has urged Gulf countries to make greater progress toward more diversified, dynamic, private-sector driven economies.
The slump in oil prices and ongoing conflicts continue to weigh on growth prospects of the Middle East, North Africa, Afghanistan and Pakistan, said the IMF in its latest regional assessment.
In the GCC, the IMF projects non-oil growth to be 1.8 percent in 2016 and 3.1 percent in 2017, much lower than the 7 percent average between 2000 and 2014, owing to the dampening effect from fiscal consolidations and a broader weakening of private sector confidence in the face of lower oil prices, said the report.
Non-oil growth outside the GCC is likely to be almost non-existent this year due to the conflicts in Iraq, Libya, and Yemen. 
In Iran, oil production has picked up strongly yet a broader growth dividend from the easing of the sanctions is materializing only slowly as international companies remain cautious and domestic reforms are proceeding gradually.
For the region’s oil importers, spillovers from slower growth in the GCC and conflicts — as well as deep-rooted domestic structural impediments — are weighing on growth. These economies are projected to expand by 3.6 percent in 2016 and 4.2 percent in 2017.
Over the medium term, growth will be too low to improve living standards significantly or cut into high unemployment, which stands above 10 percent for the general population, and as high as 25 percent for young people.
The entrenched nature of low oil prices and conflicts underlined the need for the region’s countries to continue several crucial policy adjustments, the IMF report emphasized.
“Oil exporters are facing the difficult task of growing their economies in a climate of lower budget revenues and spending cuts,” Ahmed said. “Therefore, the challenge now and into the future will be to find alternative sources of revenues and economic growth to maintain the level of prosperity many of them have become accustomed to,” said Masood Ahmed, IMF Middle East and Central Asia department director.
“And for the oil importers, the key challenge is boosting job creation via more dynamic private sectors,” he added.

Source: Arab News