The Arab Monetary Fund has released the 19th edition of the Arab Economic Outlook Report for the year 2023, which examines the current economic conditions and future prospects of Arab countries, reported Al-Rai Daily.
The report aims to provide insights into economic growth and price development trends in the Arab region. According to the report, the Gulf countries are expected to experience a slowdown in economic growth in 2023, stabilizing at 2.3 percent compared to 7.6 percent in 2022.
However, the economic growth rate for the group is expected to improve in 2024, reaching around 3.2 percent. This improvement is attributed to an expected increase in oil production compared to 2023, a decline in monetary policy tightening, the activation of major investment projects, and an increase in non-energy exports.
The report also highlighted the contribution of changes in food and beverage prices to inflation in Kuwait, which reached 32 percent in 2022, compared to 28 percent in Saudi Arabia. The food and beverage item has a significant weight in calculating inflation in Egypt, Iraq, and Tunisia. In Kuwait and Saudi Arabia, it comes in second place in terms of weight.
Housing and utility costs, including water, electricity, and gas, also contributed to inflation in various countries such as Jordan, Iraq, Saudi Arabia, Kuwait, and Tunisia. The changes in real estate prices in these countries have impacted the cost of renting housing, primarily due to the rise in energy costs.
Transportation services have also contributed to inflation in countries like Jordan, Saudi Arabia, Tunisia, Kuwait, Iraq, and Egypt. The report forecasts an inflation rate of 3.2 percent in Kuwait for this year, making it the second-highest expected inflation rate in the Gulf after Qatar (3.3 percent). However, the rate is expected to decrease next year to 2.7 percent.
In terms of global oil supplies, the report predicts a rise in global production of liquid fuels by 1.2 million barrels per day in 2023 and 1.7 million barrels per day in 2024, despite the voluntary production cuts by the OPEC Plus bloc. The increase in oil production is driven by countries outside of OPEC, such as the United States, Brazil, and Canada.
The report also mentions that Russia’s oil production is expected to decrease by 0.3 million barrels per day in 2023 and remain stable in 2024. Additionally, OPEC’s crude oil production is projected to decrease by 0.8 million barrels per day in 2023 but increase by approximately 0.4 million barrels per day in 2024. The impact of raising interest rates in the Gulf countries is said to depend on oil prices and the strength of domestic demand.
Currently, the report suggests that the impact of raising interest rates in the GCC countries is limited until the third quarter of 2023, as it has a limited effect on the growth of the non-oil sector. Overall, the Arab Monetary Fund’s report provides valuable insights into the economic outlook for Arab countries and highlights key factors influencing economic growth and inflation rates in the region.
