Middle East economies are expected to post a higher than forecast GDP growth of 3.8 per cent in 2012, according to the latest quarterly report released by ICAEW.
The report stated that earlier predictions were conservative because of the volatility in the Eurozone and the slowing global economic activity at the end of 2011.
“The prospects have improved dramatically since the beginning of the year,” it said.
“We were not only too cautious about oil production but even more so about the price of oil this year. Some ascribe the sustained high price of oil to the impact of political tensions in the Middle East – and it is clear that this is having some impact.
“But our reading is that the very large sums of money printed in the Eurozone, quantitative easing and open market operations in the US, and generally expansionary monetary policy around the world are having an effect,” the report stated.
According to forecasts by the World Bank, the Middle East and North Africa (MENA) region is expected to grow 3.5 per cent in 2012. The IMF’s World Economic Outlook released in April projected MENA GDP growth slightly higher at 4.2 per cent, 0.6 per cent more than its January estimates.
However, estimates for the region’s economic growth in 2013 are more subdued.
While IMF forecasts it at 3.7 per cent, ICAEW estimates it even lower at 3.3 per cent.
“With the region’s economy significantly affected by emerging markets’ thirst for oil, any reduction in energy demand from big customers like China and India could lead to a cooling off in growth,” Amanda Line, regional director, ICAEW Middle East, said in a statement.
“This means it is still very important to press on with building a diversified economy across MENA that will reduce reliance on oil alone,” she added.