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IMF raises Saudi growth forecast but lowers MENA, global expectations

IMF raises Saudi growth forecast but lowers MENA, global expectations

The organisation sees Gulf oil exporters benefitting from rising oil prices but says sanctions on Iran will hit the wider MENA

The International Monetary Fund (IMF) on Tuesday predicted that the Saudi economy and those of other Gulf oil exporters would grow faster this year than it previously anticipated.

The fund raised its 2018 growth forecast for the kingdom from the 1.9 per cent it said in July to 2.2 per cent. Its growth forecast for next year was increased from 1.9 per cent to 2.4 per cent. This compares to a 0.9 per cent contraction in the economy last year.

The change in forecast was ““driven by a pickup in non-oil economic activity and a projected increase in crude oil production”, the IMF said.

Read: Saudi reforms to boost growth despite any Aramco IPO delay – IMF

It also increased its growth forecasts for the UAE to 2.9 per cent this year and 3.7 per cent in 2019, from the 2 per cent and 3 per cent respectively the organisation forecast in April.

Read: IMF boosts UAE growth forecast, encourages corporate tax introduction

Meanwhile, Kuwait’s economy is expected to grow 2.3 per cent this year and 4.1 per cent next year from the 1.3 per cent and 3.8 per cent forecast previously.

But growth across the wider Middle East and North Africa (MENA) and the world is expected to be lower than previously forecast due to sanctions on Iran and trade tensions.

The organisation’s regional growth forecast is 2 per cent this year and 2.5 per cent next year from 3.2 per cent and 3.6 per cent in April.

“The downward revisions reflect to an important extent the worsening of growth prospects for Iran, following the reimposition of US sanctions,” it said.

The IMF expects the Iranian economy to contract 1.5 per cent in 2018 and 3.6 per cent in 2019 and globally it is predicting 3.7 per cent growth this year and next year, a 0.2 percentage point reduction on its previous forecast.

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