Economic growth of the Middle East countries remained strong at 5.8 per cent across the region in 2007 and is likely to rise to 6.1 per cent in 2008 and 2009, the International Monetary Fund’s World Economic Outlook report said.
Middle East oil powers are using their increased wealth to weather the global economic strife but cannot escape the inflation that has been fuelled by their main export, it said on Wednesday.
Inflation pressures “have risen considerably in recent months, owing to strong domestic demand, rising food prices, and higher rents” in the Gulf states where there are housing shortages, the report said. But the IMF said the inflation outlook was “broadly balanced”.
The IMF said oil production levels have barely changed “but high oil prices are supporting increased government spending, including on infrastructure and social projects, and strong expansion of credit to the private sector”.
Growth in countries like Egypt has been “spurred by trade and financial spillovers from oil-exporting countries as well as domestic reforms”.
The Middle East nations must “maintain progress toward increasing integration with the global economy and to reduce poverty in the context of a less-friendly global environment”.
Tighter global financial markets could “slow the pace of capital inflows and investment” it warned. “In a number of countries, political and security risks will remain very important.”
All the major oil exporters will continue to see stable growth this year.
Saudi Arabia was predicted to see 4.8 per cent growth this year, up from 4.1 per cent in 2007 and rising to 5.6 per cent in 2009. Egypt’s economy was predicted to advance seven per cent this year and 7.1 per cent next year.
Lebanon’s growth fell this year to three per cent from four per cent in 2007 and was only predicted to started recovering in 2009 at 4.5 per cent.
Consumer price index is near 14 per cent in Qatar and above nine per cent in the UAE – a 19-year high. (AFP)
IMF predicts 6.1% economic growth for Middle East