IMF Forecasts Improved Growth for MENA Region Throughout 2012
Key oil exporters in the MENA region continue to increase domestic demand levels and drive oil production rates higher, resulting in stronger growth throughout the Middle East and North African region (MENA), according to the IMF’s recent WEO (or World Economic Outlook) report. The IMF also expects Libyan activity to rebound after the political turmoil of 2011.
Protected from the influence of external financial shocks, sub-Saharan African nations should also experience significant growth over 2012 and 2013, according to the IMF.
Forecasts for the global economy have shrunk from the 3.6 percent growth forecasted in April, to 3.5 percent in the recent report. The WEO quarterly update saw growth expectations for 2013 decline slightly, moving from 4.1 percent in the last quarterly report to 3.9 percent in the recent WEO. US growth fell from 2.1 percent in April’s report to 2 percent growth in June’s WEO. Performance in the Eurozone held steady at 0.3 percent contraction for 2012, although growth for 2013 fell from 0.9 percent to 0.7 percent.
Growth in the US over 2013 is now expected to be 2.3 percent, compared to 2.4 percent in April’s WEO. Further areas of weakness were detected in the already slow-moving global economic recovery, along with continued financial distress in the Eurozone and less growth in emerging economics, according to IMF’s regular economic report.
The IMF released two other reports earlier this week. The GFSR (or Global Financial Stability Report) update stated that financial stability faces higher levels of risk for Q2 2012 due to sluggish global economic recovery and worry over the quality of European bank assets. The Fiscal Monitor also received an update, noting that emerging and advanced economies were experiencing fiscal adjustments as expected.
The most recent WEO forecasts 3.5 percent growth in the global economy for 2012, a 0.1 percent decrease from the previous report, and 3.9 percent for next year, down 0.2 percentage points. Chief economist and Research Department director at IMF, Olivier Blanchard stated that higher levels of downside risks are more worrisome than baseline forecast revisions.
In the report, IMF reiterated that revisions are based on three vital assumptions: the existence of policies helping Eurozone nations, including Spain and Greece, to gradually move through 2013; US fiscal policy remains steady and avoids sharp tightening actions; and that certain major emerging economies experience growth as a result of steps currently in place.
The largest immediate risk, according to the IMF, is the possibility of the Eurozone crisis escalating due to insufficient or overdue policies. Nations in the Eurozone periphery need to succeed, stated Blanchard.
The agreements penned at the June Eurozone summit are moving in the right direction, according to the IMF report. Those actions should facilitate a banking union and break down the adversity between sovereign nations and banks. He also noted that measures must be implemented in a timely manner to counteract the recent declines in sovereign debt markets, and that priority must be placed on the progression of fiscal and banking unions.
Fiscal Surplus For Oman Surges in 2012 Opening Five Months
As oil prices and oil production experience impressive gains, the fiscal surplus in Oman continues to grow, increasing seven times over during the opening five months of this year, even with higher levels of public spending.
According to the Ministry of National Economy in Oman, surplus totals reached Dh 15.2bn (or RO 1,580.5mn) from January to May of this year, much higher than the Dh 1.77bn (or RO 18.4mn) recorded in the same period of 2011.
Oil export revenues surged by 33.1 percent, moving from RO 3.35bn to RO 4.47bn and driven by rising crude prices and production increased. This increase boosted the fiscal surplus. Production rose from almost 879,400 barrels per day to 897,700 bpd.
Crude prices rose sharply, going from $94.8 to $113.5 per barrel, and boosting Oman’s total actual earnings by around 34.4 percent, or from about RO 4.54bn to RO 6.1bn.
Gas revenue also increased, moving from RO 425.8mn to RO 772.8mn, a jump of 81 percent. Gas revenues include LNG sales originating at the Sur liquefaction plant.
Actual public spending rose by almost 38.8 percent, from around RO 3.27bn to RO 4.52bn according to the report.
Detailed breakdowns indicated that current expenditures grew by almost 48 percent and capital spending fell by about 14.9 percent, mostly consisting of civil ministries development spending and capital expenditures. Oil investment programmes received almost 5.5 percent more allocations over the period.
Current levels of spending grew as a result of substantial increases in oil sector expenditures, which increased by about 145 percent, moving from RO 89mn to RO 218.8mn, according to the report.
Oman, not a member of OPEC, reported a RO 864.8mn fiscal surplus last year as a result of increased output and crude prices. This figure came after an actual deficit of around RO 48.8mn (or Dh 468mn) in 2010.
Early in 2011 Oman forecasted a RO 850mn shortfall during the announcement of the 2011 budget. Those figures were significantly revised, with the gap hitting RO 1,850mn once Sultan Qaboos approved massive salary increases and job creation for Omani public employees in response to regional unrest that occurred in February of last year.
Oman controls massive proven oil reserves, and forecasts a rise in spending over the course of 2011 to 2015. The nation’s development plan should increase by 113 percent, assuming high oil prices and supported by plans to increase crude output.
Record-high expenditures of RO 10bn were announced in the 2012 budget, with revenues at RO 8.8bn and resulting in a RO 1.2bn shortfall.
Paul Holdsworth, Staff Writer, Gulf Jobs Market News