Expectations are that Qatar will experience the world’s highest rate of real GDP growth, recording a surge of 20 percent based on data from the QNB (or Qatar National Bank) Capital review covering the WEO (or World Economic Outlook).
QNB Capital released a statement on April 30 regarding the most recent WEO, which reported that the IMF predicts 4.4 percent global growth for this year and 4.5 percent next year. The IMF has also reduced its expectations for real GDP growth in the MENA region for this year and next, dropping them 0.5 percent each year to 4.1 percent (2011) and 4.2 percent (2012).
These GDP growth reductions are a result of widespread social turmoil in the area, as well as increasing amounts of sovereign risk premiums, and rising prices of imported commodities.
The contraction has already shown up in some areas, including Egypt, where this year’s first quarter real GDP fell by 7 percent.
Projections for the real GDP 2011 and 2012 state an expansion of about 2.5 percent will be seen in advanced economic regions and 6.5 percent in those regions with an emerging or developing economy. A major indicator of global economic recovery and forecasted growth is strengthening retail sales in the economies of both advanced and emerging markets. Negative and risky conditions with regards to the global outlook are mostly a result of geopolitical unrest and uncertainties.
The oil exporting nations in the MENA region are likely to experience different economic performance this year than those nations importing oil. Importing nations have been affected by recent unrest more than the exporters as social turmoil dampened growth rates. This caused the IMF to expect a 1.9 percent slow down in the economies of oil importers this year. With the assumption that the unrest will not last, oil importers are expected to see 4.5 percent recovery next year.
In oil exporters the rising prices and demand for oil should see a boost in production and export levels. Increased revenues from oil will be spent on social programs. Qatar leads the pack in this group’s growth as expanding conditions continue in the production of natural gas and the nation makes substantial infrastructure investments.
Unrest in Libya has resulted in lower oil production for that nation, although other oil producing nations in the region have picked up the slack. This means that the Libyan unrest and production decrease will not negatively affect overall GDP growth in the MENA region.
The economic impact of the turmoil is spreading beyond those nations immediately affected. Increasing levels of instability in the region dampen the investment climate. The IMF has also reported higher sovereign risk premiums across the area. These conditions push the cost of borrowing higher and drag down economic activities.
Higher than forecasted prices for commodities also resulted in cuts to IMF’s growth expectations. Prices for non-oil commodities should continue moving up throughout 2011, which will have a negative impact on MENA nations that import these commodities. Increasing costs of raw materials in industry will dampen and contain investments. Also, increasing food prices will cut back disposable income and limit private consumption levels.Paul Holdsworth, Staff Writer, Gulf Jobs Market News