INTERNATIONAL. Economic growth in the Middle East and North Africa will remain below its average rate of 4.5% until 2011 as lower oil prices and weaker European export markets hurt growth, the World Bank said.
Economic expansion in the region will slow to 1.6% this year from 5.6% last year, the World Bank said in its regional outlook released today.
Gross domestic product for the developing countries of the region is expected to halve to 3.1% this year from 6% last year, the World Bank said.
The Middle East and North Africa account for more than a third of global oil production. Oil prices plummeted from a high of around US$147 a barrel in July to a low of about US$34 a barrel in December. Prices are now at around US$69 a barrel. Oil producing Gulf states are increasing state spending to bolster their economies and tapping bond markets to support businesses.
“Those elements which supported growth over the last five years are anticipated to unwind: oil prices are projected to rise only modestly, averaging $66 in 2011; the European export market will remain flaccid; and slowing of services receipts and remittances will exact a toll on growth for both developing oil exporters and the more diversified economies of the region,” the bank said.
Oil and gas revenue for the Gulf Cooperation Council, an economic and political group which includes Saudi Arabia, the United Arab Emirates, Kuwait, Bahrain, Oman and Qatar, dropped from US$670 billion in 2008 to an estimated US$280 billion during 2009, a decline equivalent to 38% of the group’s gross domestic product.
Revenue for the developing oil exporters of the region; Algeria, Iran, Iraq, Syria, and Yemen declined from US$320 billion to an estimated US$140 billion, equivalent to 28% of GDP, the bank said.
Saudi Arabia and Kuwait will fall into recession in 2009 and spillovers from lower oil revenue may damage other Middle East countries through reduced investment, remittances and tourism, the World Bank said.
Jordan and Lebanon, which have large current-account deficits “face the largest risk of a balance of payments crisis in a protracted recession scenario,” the World Bank said in the report.
Growth in Jordan and Lebanon will slow to 2.5% this year, according to the World Bank’s forecasts.
The World Bank also slashed its outlook for developing nations' economies, estimating growth at a meagre 1.2% this year while warning more measures were needed for a recovery to take hold.
The forecast amounts to steep drops from the previous two years, with developing countries having seen 8.1% growth in 2007 and a 5.9% expansion in 2008.
Without China and India, the bank said, output would shrink 1.6% this year.
The economic weakness in the developing world after recent years of robust growth heightens the risks of social unrest and deepening poverty, the 185-nation institution said.