Losses from lower oil exports should sap up to $300 billion from economies in the Middle East and Central Asia this year, as countries in the region adjust to falling crude prices, the International Monetary Fund said on Wednesday.
Economies that are particularly dependent on oil exports, including Qatar, Iraq, Libya and Saudi Arabia, will be hit hardest by the more than 50 per cent decline in petroleum prices, the IMF said in an update to its outlook for the Middle East and Central Asia.
Oil prices are now hovering near six-year lows amid expectations of an abundance of supply tied to unexpectedly high production of US shale crude.
The IMF said, however, that falling crude prices will not translate immediately into major gains for oil importers in the Middle East and Central Asia, which have been hurt by the slowing growth prospects of key trading partners in the euro zone and Russia.
The IMF this week cut its forecasts for global economic growth to 3.5 per cent for 2015 compared with an October outlook of 3.8 per cent, and significantly lowered projections for oil exporters Russia, Nigeria and Saudi Arabia.
The IMF said nearly every exporting country in the Middle East and Central Asia is expected to run a fiscal deficit this year because of the oil price shock, which prompted the IMF to downgrade the region’s growth prospects by as much as 1 percentage point compared with its October forecasts, to 3.4 per cent for 2015.
The losses are likely to reach 21 percentage points of gross domestic product in the countries of the Gulf Cooperation Council, or about $300 billion. In non-GCC countries and in Central Asia, the expected losses are $90 billion and $35 billion this year, the IMF said.
Oil importers will see smaller gains, compared to exporters’ losses, as their economies are less dependent on the price of petroleum, the IMF said. Morocco, Lebanon and Mauritania are expected to gain most from falling crude prices, while Lebanon and Egypt are likely to see improved fiscal balances, the IMF said.
The IMF expects oil-importing countries in the Middle East to save most of the windfall, boosting their current account positions by 1 percentage point of GDP, compared with what the IMF forecast in October.
Central Asian importers should see worse external positions this year, compared with the October forecasts, because of lower demand from Russia and China, the Fund said.