DUBAI: The MENA region is expected to witness a 3.8 percent growth in GDP in 2016, revealed an Al-Masah Capital Limited Report titled ‘MENA Yearbook – 2016’. In contrast, the global economic growth prospects are somewhat modest with the World Bank, International Monetary Fund (IMF) and the Organization for Economic Co-operation and Development (OECD) lowering their forecasts to 2.4 percent, 3.1 percent and 2.9 percent respectively.
The sharp decline in oil prices, various global factors and rising geopolitical tensions meant that the MENA Region is estimated to have registered a lower GDP growth rate of 2.3 percent in 2015 as opposed to 2.6 percent a year earlier.
According to the report, despite these headwinds the MENA region has continued its growth trajectory with the same expected this year on account of the various government initiatives to introduce alternative measures to boost revenues and GDP contributions of the non-oil sector. With oil prices dropping to record lows since mid-2014, government revenues are dwindling and state deficits are burgeoning.
Oil price volatility is expected to continue in 2016 and hence increasing non-oil sector revenues will enable governments fund their ambitious spending programs which are key to sustaining regional economic growth.
The report highlights and analyzes the economic performance and prospects of the key MENA economies namely the six GCC countries and Egypt, as well as the key developed economies of US, euro zone and Japan, and emerging economies of China and India. It highlights the various macroeconomic challenges that prevailed in 2015 which are expected to persist and most likely intensify further this year.
The events that unfolded in 2015, the success or failure of the divergent monetary policies of the central banks in developed economies and headwinds in key emerging markets especially China, are critical factors that will shape the global economy in 2016, cites the report.
