The lower projection reflects Saudi Arabia’s decreased growth prospects since the OPEC+ group agreed to continue their cuts to oil supply.
Rabat – The IMF’s latest World Economic Outlook, published on Monday, January 20, lowered its prediction of the growth of the economy in the Middle East and Central Asia to 2.8% growth in 2020.
The new prediction is 0.1% lower than the previous economic outlook prediction of 2.9% in October 2019. However, the IMF estimates the region will experience 3.2% growth in its economies in 2021.
According to the report—titled “Tentative Stabilization, Sluggish Recovery?”—the lower projected growth for the region “mostly reflects” a change in Saudi Arabia’s expected growth after oil producing countries in the OPEC+ group agreed to continue cuts to oil supply in December 2019.
IMF projects “subdued” prospects for countries in the Middle East and Central Asia with civil wars, citing Libya, Syria, and Yemen. Iraq and Lebanon, with ongoing protests, are also set to experience less growth, as is Iran, amid increased tension with the US.
Globally, the IMF predicts economies to grow by 3.3% in 2020, also 0.1% lower than predicted in the October 2019 report.
Increasing geopolitical tensions, particularly between the US and Iran, was the first of four main risks to the global economic outlook noted in the report. The US’s higher tariffs on goods from trading partners was a second major risk to global growth. Additionally, the report noted more general risks from rapid shifts in investments and tighter lending policies that could trigger a general slowdown to weather-related disasters.
For developing countries with high debts, the IMF encouraged a consolidation of debt “by improving subsidy targeting, broadening the revenue base, and ensuring stronger compliance.”
At the same time, developing countries should look to investing in health and education “to raise human capital” and “incentivizing entry of firms that create high value-added jobs and gainfully employ wider segments of the population.”
The January 2020 World Economic Outlook report comes out just one day before the World Economic Forum begins its meetings in Davos, Switzerland, on Tuesday, January 21.