Oil price rebound widens Middle East economic fault lines
Rebounding oil prices are widening economic gaps between oil exporters and importers in the Middle East and North Africa, the Institute of International Finance (IIF) said.
The region is set for growth of 2.3% this year and 4.3% in 2022 after a consolidated 3.8% gross domestic product contraction last year, the IIF, a trade body for the global financial industry, said in a report.
“While the economic recovery continues to gain momentum, a split in macroeconomic prospects has emerged within the region … the divergence in economic performance between oil-exporting and oil-importing countries has widened further,” it said.
Oil-producing countries are set for current account surpluses of $165 billion this year and $138 billion next year after a current account deficit of $6 billion last year based on oil price forecasts of $71 per barrel this year and $66 next year, the IIF said.
Gulf countries’ public foreign assets – including foreign reserves and sovereign wealth funds – are set to rise to over $3 trillion by the end of 2022, equivalent to 170% of GDP.
By contrast, for regional oil importers Egypt, Jordan, Lebanon, Morocco, Tunisia, and Sudan, aggregated current account deficits will increase to $35 billion this year from $27 billion in 2020, largely because of higher oil import costs and low tourism receipts.
Public foreign assets among importers will correspond to 15.5% of GDP this year, the IIF said.
Tourism, which accounts for a large chunk of GDP among these countries, is not expected to return to pre-pandemic levels until 2023.
“The pickup in growth in 2022 in these countries will be driven by investment and exports. However, this will still be insufficient to significantly reduce the high unemployment rates, averaging 14%, with youth unemployment of 28% – the highest in the world,” it said.
Source: Reuters (Reporting by Davide Barbuscia; editing by Jason Neely)