Middle East and North Africa region posts modest economic improvement: IMF

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Tuesday 05 May 2015 - 12:08 Makkah mean time-16-7-1436 (image from imf.org) Washington, (IINA) - The Middle East and North Africa region is experiencing a modest economic recovery, despite the sharp drop in oil prices and deepening conflicts, the International Monetary Fund (IMF) said in its latest regional assessment report. The Regional Economic Outlook Update, released Tuesday, projects that growth will increase slightly to about 3 percent in 2015. But growth rates, although rising, remain too low to reduce the region’s persistently high unemployment in a meaningful way. “Although the region’s countries have made progress in implementing reforms, there is still more that can be done not just to stabilize the economy but to raise economic prospects in a sustainable, inclusive manner,” Masood Ahmed, director of the IMF’s Middle East and Central Asia Department, told reporters at a briefing in Dubai. Ahmed noted that despite the fact that oil prices halved between July 2014 and April 2015, oil-exporting countries have managed to keep growth steady by using the financial cushions that they have built up over the past decade. The region’s oil-importing countries are seeing higher growth, owing to prudent economic management combined with a more favorable international environment, Ahmed said. Their economies have benefited from lower oil prices; however, because of limited pass-through to retail fuel prices, lower oil prices had only modest effects on reducing production costs and increasing disposable incomes. According to the IMF, growth in the region’s oil-exporting countries reached about 2.5 percent in 2014 and is expected to remain at this level in 2015. Next year, growth is projected to rise to 3.5 percent. The report suggests that countries should continue to use the gains from lower oil prices to strengthen cushions for dealing with future unexpected shocks and to reduce public debt. As with the oil exporters, lower oil prices present this group of countries with the opportunity to move closer to eliminating costly and inefficient energy subsidies. SM/IINA