Middle East and Central Asia Regional Economic Outlook. May 2, 2018

Transcription

1 1 Middle East and Central Asia Regional Economic Outlook May, 18

2 Outline Outlook What Next? The Way Forward Takeaways

3 Outlook: From Global to Regional 3

4 The broad-based global recovery continues Global Growth Developments (Arrows represent direction of revision since Oct. 17 WEO) World Output Advanced Economies Emerging Market and Developing Economies

5 Growth recovering in oil-exporting countries GCC Real GDP Growth (Percent) 8 Other Oil Exporters Median Inter-quartile range T Range 5

6 Continuing, but fragile, growth recovery in oil-importing countries MENAP Oil Importers Real GDP Growth (Percent) MENAP Oil Importers with IMF Programs EGY JOR MRT MAR TUN Median Inter-quartile range T Range

7 Developments in conflict countries remain volatile Real GDP Growth (Percent) 15 Iraq 8 7 Libya 1 Yemen Sources: National authorities and IMF staff calculations. 7

8 The region is not fully benefitting from the favorable global growth upswing Average Growth (Real GDP Growth, in percent) April 17 April GDP per Capita Relative to Peers 1 (In Percent) GCC Non-GCC MENAP Oil Exporters MENAP Oil Importers (RHS) ¹Per capita GDP for GCC countries is shown relative to Advanced Economies; for the other country groups it is shown relative to Emerging Market and Developing Economies. 8

9 What Next? Strengthen Growth and Resilience 9

10 External demand and some gains in competitiveness are supporting factors Current Account Deficit (Percent of GDP) Real Effective Exchange Rates (Three-month moving average, index 15=1) 7 JOR LBN MAR PAK TUN EGY MENAP Oil Importers Jan-15 Jan-1 Jan-17 Jan-18 1

11 The outlook for oil prices remains uncertain, weighing on the growth of oil exporters Commodities Prices (Price index, 5 = 1) Brent Crude Oil (U.S. dollars a barrel) Metals Agricultural products APSP Crude Oil, US$ per barrel (RHS) % confidence interval 8% confidence interval 8% confidence interval Futures Projections

12 Geopolitical tensions remain a drag on growth in MENAP The Economic Intelligence Unit s Security and Political Risk Index (Index 1-5, from lowest to highest) Security Risk Political Risk Oct-17 Mar-18 Oct-17 Mar-18 MENAP Oil Importers MENAP Oil Exporters Source: Economist Intelligence Unit. Notes: Index based on the EIU rating of individual countries. 1

13 Public Gross Debt in 17 Debt levels increased, limiting scope to use fiscal policy to stimulate growth Total Public Debt in 11 vs. 17 (Percent of GDP) Rest of the World 1 MENAP Oil Importers MENAP Oil Exporters 5 line Public Gross Debt in 11 MENAP Oil Exporters MENAP Oil Importers 13

14 UAE OMN QAT BHR KWT LBN SAU JOR TUN EGY MAR PAK Borrowing conditions could become more challenging 5 U.S. Libor Interest Rate (In percent) Cumulative Fiscal Deficits 18- (Billion, US dollars) International Debt Maturing in 18- (In percent of GDP) 3 Oct-17 Current Public_GDP Private_GDP In US$ billion, RHS MENAP Oil Exporters MENAP Oil Importers Sources: National authorities, Dealogic, and, IMF staff calculations. 1

15 Need to maintain fiscal adjustment, but room to make it more growth-friendly Fiscal Deficit for MENAP (In percent of GDP) MENAP Oil Exporters MENAP Oil Importers 15

16 Despite subsiding inflationary pressures, little scope for accommodative monetary policy 1 1 Inflationary Pressures Subsiding (Weighted averages, CPI, percent change, year average) MENAP oil exporters MENAP oil importers 3..5 Selected Policy Rates (Percent) Jordan Bahrain Saudi Arabia Egypt (rhs) Qatar (rhs) Tunisia (rhs) Pakistan (rhs) Projections Dec-1 Dec-15 Dec-1 Dec

17 ALG BHR KWT OMN QAT SAU UAE EGY JOR LBN MAR TUN More needs to be done to increase access to finance by the private sector Private Credit Growth (Percent, year-over-year) Non Performing Loans (Percent of total loans) MENAP Oil Exporters MENAP Oil Importers (Excl. Egypt) MENAP Oil Exporters MENAP Oil Importers Notes: Latest available data for each country. 17

18 The Way Forward: Promote Inclusive Growth 18

19 Promote a dynamic private sector by reducing red tape and strengthening institutions Challenges to Doing Business (Percent of countries identifying the constraint among the top five) GCC Restrictive labor regulations Access to finance Inadequately educated work force Inefficient govt bureacracy Poor work ethic in national labor force Policy Instability Corruption Inadequate supply of infrastructure Insufficient capacity to innovate Government instability Other MENAP Private Investment (Percent of GDP, Index =1) MENAP Oil Exporters LAC MENAP Oil Importers SSA Tax regulation Source: World Economic Forum Competitiveness Report 17-18, 19

20 UAE IRN QAT SAU ALG KWT JOR EGY TUN MAR PAK Encourage further opening and diversification to benefit from trade opportunities 7 Estimated Contributions of Trade Openness to Growth (Percent) 18 expected annual growth ¹ Trade openness 1..8 Export Diversity Index, 1¹ ( to 1, higher is more diverse) EMDE average, MENAP Oil Exporters MENAP Oil Importers. MENAP Oil Exporters MENAP Oil Importers Note: see October 17 Regional Economic Outlook :Middle East and Central Asia for discussion.

21 Complement by inclusive policies to ensure growth is shared by all 1. Improve governance and control of corruption 7. Help refugees. Increase Access to finance. Support rural communities Inclusive growth 3. Strengthen social safety nets 5. Eliminate gender disparities 1. Increase opportunities for youth

22 Fund Engagement IMF Financial and Technical Assistance MAR: PLL (7//1) TUN: EFF (5//1) JOR: EFF (8//1) LBN SYR IRQ: SBA (7/7/1) IRN AFG: ECF (7//1) ALG LBY EGY: EFF (11/11/1) KWT SAU PAK SDN YEM OMN QAT BHR MRT: ECF (1//17) DJI UAE SOM.5 (TA in Person-Years of Field Delivery, 17)

23 Takeaways MENAP Region needs to make the most of the global recovery to enhance growth and to strengthen fiscal and financial stability Further reforms are needed to create jobs and secure sustainable and more inclusive growth Policy Recommendations: MENAP OE: Time to accelerate reforms and maintain fiscal consolidation, while accelerating economic diversification strategies MENAP OI: Fragile growth recovery with vulnerabilities remaining, calling for further reforms to secure resilience and job creation 3