x Abu Dhabi, UAEFriday 28 July 2017

IMF: Middle East growth rising, but more jobs needed

The International Monetary Fund forecasts Middle Eastern economies to grow twice as fast over the next two years as they did in 2009.

DUBAI // Middle Eastern economies are likely to grow roughly twice as fast over the next two years as they did in 2009, but the region must do more to diversify its economies and create jobs, the International Monetary Fund has said.

The Washington-based body forecasts the economy will grow by 4.2 per cent this year and 4.8 per cent next year in the region.

That compares with growth of 2.3 per cent last year as the region struggled with lower oil revenues and other effects stemming from the global economic crisis.

Overall, the IMF said in its latest regional economic outlook that the Middle East is enjoying "a generally robust recovery" thanks to higher oil prices and government policies designed to mitigate the effects of the worldwide downturn.

Because of increased oil prices, the IMF estimates Gulf states and other oil-exporting countries in the region will see their combined current-account surplus rise to US$150 billion next year, up from just $70bn last year, giving them more leeway to spend.

However, economic growth outside the energy sector remains sluggish. The IMF called on oil-exporting nations to reduce their dependance on crude by diversifying their economies and to tackle lingering problems uncovered by the financial crisis, such as debt burdens.

The region's generally poorer oil-importing countries - many of which depend on tourism, trade and worker remittances from their richer neighbors - are expected to see their economies grow 5 per cent this year, up from 4.6 per cent in 2009, the IMF said.

On a per capita basis, though, their growth significantly lags behind that of other parts of the developing world, the IMF said.

That presents major challenges in creating jobs for their young and fast-growing societies, where chronic unemployment averages about 11 per cent.

Providing enough jobs for the oil-importing countries' unemployed and up-and-coming workers over the next decade would require growth of at least 6.5 per cent, the IMF estimates. That, according to the IMF, means creating more than 18 million jobs just in the oil-poor parts of the Arab world alone.