Recovering oil prices will lead to recovery in the GCC countries’ economies, according to the International Monetary Fund’s Regional Economic Outlook for the Middle East and North Africa. The countries will see 2.4% growth in 2018 and 3% growth in 2019. That’s up from a contraction of 0.4% last year.
With oil-dependent economies, GCC nations well-being is highly centered around the price of crude oil. “The growth outlook for oil exporters remains subject to significant uncertainty about the future path of oil prices,” the IMF wrote in its report.
This is due to many factors, including the economic crisis in Venezuela and US sanctions against Iran, which earlier this year led to speculation that OPEC might not be able to meet global demand. More recently, with production in the US Permian basin ramping up, the worry has shifted towards an oversupplied market.
OPEC’s production cuts helped increase oil prices, leading to an increase in oil revenue for MENA exporters by $260bn between 2016 and 2018.
Iran’s economy is expect to shrink by 3.6% in 2019, according to the IMF, while oil importers in the MENA region are expected to see growth of 4% in 2019, down from 4.5% in 2018. Still, this growth is not enough to create the employment opportunities needed in the region, which often faces instability.
