At the same time, the organization expects a sharp decline of growth for the main oil-exporting countries in the Middle East.
In its latest semestrial report on the world economic outlook published Tuesday in Washington, the Bretton Woods institution also lowered its projected GDP growth for Morocco for 2018 to 3 percent, against a forecasted 3.9 percent in its April report. The IMF however expects growth to pick up steadily to reach 4 percent in 2019 and 4.5 percent in 2022.
With regard to the current account deficit, IMF projections forecast a decrease of 4 and 2.9 percent respectively in 2017 and 2018, against 2.6 and 2 percent forecasted in the April report. The fund also maintained its projected growth in unemployment of 9.3 and 9.5 percent for 2017 and 2018.
In its country report published in February 2017, the IMF noted that Morocco’s medium-term outlook remains favorable, with a rebound in growth expected by 2021. However, risks remain substantial, mainly related to growth in developed and emerging countries, geopolitical tensions in the region, global energy prices, and volatility in financial markets.
For the Bretton Woods institution, stronger growth in the medium term depends on the sustained implementation of comprehensive reforms related in particular to the efficiency and participation of the labor market, access to finance, the promotion of quality education, the efficiency of public expenditure, and the constant improvement of the business climate.
MENA: Decline of oil prices hinder growth
A decline in the growth of the main oil-exporting countries in the Middle East has put a strain on the economic outlook for the region as a whole, said the IMF, explaining that “oil exporters are hard hit by the prolonged adjustment” of their budget due to decreased commodity prices.
For the institution, Iran’s growth should drop to 3.5 percent this year from 12.5 percent in 2016. Iraq’s economic activity is expected to contract by 0.4 percent from 11 percent in 2016, while the Saudi economy, the largest in the region, is expected to close the year at around 0 percent, down from 1.7 percent last year.
The economy of Kuwait is expected to be the most affected, with a contraction of 2.1 percent of GDP in 2017, while those of the United Arab Emirates and Algeria will experience modest growth of 1.3 and 1.5 respectively, according to the IMF.
Overall, growth in the MENA oil-exporting countries, which includes the six Gulf Cooperation Council states, as well as Iran, Iraq, Algeria and Libya, is expected to finish the year at 1.7 percent against 5.6 percent in 2016.
Growth in all MENA countries is expected to slow significantly from 5.1 percent last year to 2.2 percent in 2017, “as a result of the slowdown in the economy of the Islamic Republic of Iran after a very rapid growth in 2016 and reductions in oil production in the exporting countries,” the IMF said.
The fund expects oil prices to average USD 50.3 per barrel in 2017, but to remain at around USD 50 until 2022. Oil exporters have lost hundreds of billions of dollars since crude oil prices began to fall in mid-2014, resulting in sharp budget deficits and painful reforms for some countries.
Positive News for MENA Oil Importers
For the group of countries defined by the IMF as “oil importers” in the MENA region, growth is expected to grow from 3.6 percent in 2016 to 4.3 percent this year. Among them, Morocco stands out particularly with 4.8 percent for this year, after 1.2 percent in 2016.
However, the IMF warned about the impact of regional conflicts. “Internal and cross-border conflicts in parts of the Middle East continue to weigh on economic activity,” he said.
MENA’s economic growth is expected to rebound to 3.2 percent in 2018, according to the IMF. This is 0.2 percentage points higher than in July, mainly due to higher domestic demand from oil importers and an expected increase in crude production.
The diplomatic crisis between Qatar, the world’s largest exporter of liquefied natural gas (LNG), and a coalition led by Riyadh did not affect the LNG markets that continued to be supplied by Doha, the IMF concluded.