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By Satish Kanady
DOHA: The Mena region’s oil-exporting countries are expected to post solid growth in 2012, largely on account of Libya’s better-than-expected post-conflict recovery.
In the countries of the Gulf Cooperation Council, growth remains robust, supported by expansionary fiscal policies and accommodative monetary conditions, but is expected to slow from 7.5 percent in 2011 to 3.75 percent in 2013 as oil production reaches a plateau, International Monetary Fund (IMF) says in its latest assessment.
The IMF’s Regional Economic Outlook for the Middle East and Central Asia, released yesterday in Dubai, projects growth in the Middle East and North Africa region at 5.1 percent in 2012, up from 3.3 percent in 2011.
The Fund forecast price of oil is expected to remain above $100 per barrel in 2012–13. As a result, the oil exporters’ combined current account surplus is anticipated to remain near its historic high of about $400bn in 2012.
This has helped governments to respond to growing social demands by increasing expenditure on wages and salaries, which rose dramatically in most oil exporters in recent years.
Owing to higher oil prices and production, the region’s oil-exporting countries—Algeria, Bahrain, Iran, Iraq, Kuwait, Libya, Oman, Qatar, Saudi Arabia, the United Arab Emirates, and Yemen—are forecast to expand by 6.6 percent in 2012 before moderating in 2013.
But faced with a difficult external environment, growth among the region’s oil importers—Afghanistan, Djibouti, Egypt, Jordan, Lebanon, Mauritania, Morocco, Pakistan, Sudan, and Tunisia—will register just above 2 percent in 2012. In the Arab countries in transition, continued domestic disruptions are also holding back growth.
The report noted Qatar’s gas exports have risen substantially in 2012. “While crude oil export volumes in 2012 are to be at about the same level as in 2007, the region’s natural gas exporters have risen substantially, most notably in Qatar.
On aggregate for Middle East North Africa, Afghanistan, and Pakistan region (MENAP) hydrocarbon exporters, natural gas export volumes comprise about the one-fifth of hydrocarbon exports, but exceed crude oil export volumes in Qatar, Algeria and Yemen.
Despite a decline in gas prices in some markets, MENAP hydrocarbon exporters have benefited from selling gas at long-term contracted values indexed to the price of crude oil”, the Fund said.
On the region’s credit expansion, the Fund said it should be accompanied by continued monitoring of financial system soundness and supervision of individual institutions, with a role for macro-prudential tools to rein in excessive leverage in specific sectors.
Regular issuance of government debt to establish a yield curve would help diversify financing channels and facilitate bank liquidity management. Further progress in building regulatory and transactional infrastructure would help develop local debt markets for corporate issuers.
The Fund said lower availability of term finance from international banks has coincided with elevated demand from Shariah-compliant securities among regional investors, resulting in increased issuance of sukuk by the GCC. GCC yields have been falling over the course of 2012 and yields on sukuk have been lower than those on conventional bonds since the beginning of 2011.