Economic growth in the Middle East and North Africa will accelerate to 4.2 percent in 2012 from 3.5 percent in 2011, with oil producers buoyed by continued high oil prices, the International Monetary Fund (IMF) forecast in its latest World Economic Outlook report released Tuesday. However, inflation will average 9.5 percent. Growth rates may reach 11 percent in Iraq, 6.6 percent for Kuwait and 6 percent for Saudi Arabia and Qatar. Economic growth in the region will slow to 3.7 percent in 2013, the IMF forecast. The economies of oil importers will expand by 2.2 percent and crude exporters by 4.8 percent, the IMF forecast. “Among oil importers, strong oil prices, anemic tourism associated with social unrest in the region, and lower trade and remittance flows reflecting ongoing problems in Europe are major constraints,” the IMF said. “For oil exporters, risks revolve around the price of oil. For oil exporters, governments need to seize the opportunity presented by high oil prices to move toward sustainable and diversified economies,” the report noted. “Growth in the region's oil importers will be constrained by strong oil prices, anemic tourism associated with the social unrest in the region, and lower trade and remittance flows reflecting the ongoing problems in Europe. Among oil exporters, negative developments in Iran are projected to be offset by increased oil production in Iraq and Saudi Arabia and a bounce back in Libya,” the report said. “The primary challenge is to secure economic and social stability, but there is also a short-term need to place public finances on a sustainable footing,” the IMF said. The IMF also hiked its global growth forecasts for this year and 2013, but warned that Europe and oil prices could yet derail the recovery. The IMF estimated global growth at an annual rate of 3.5 percent this year, accelerating to 4.1 percent in 2013. The forecasts reflected an upgrade from the IMF's January forecasts of 3.3 percent and 4.0 percent, respectively. “The outlook for the global economy is slowly improving again but is still very fragile,” the IMF said in a twice-yearly report. China continued to be the global driver. The world's second-largest economy was forecast to grow slightly faster than believed, 8.2 percent, and a robust 8.8 percent in 2013. The new shoots of a gradual global pick-up sprang up in the first three months of the year, thanks in part to improved global financial conditions and easing fears about the eurozone debt crisis. Reconstruction in Japan and Thailand, following natural disasters, also helped to foster growth in Asian economies. “Policy has played an important role in recent improvements, but various fundamental problems remain unresolved,” said the IMF, considered the global lender of last resort for troubled member countries. The fund noted the European Central Bank's special long-term refinancing operations that have pumped cash into the eurozone banking system, the expansion of a eurozone firewall to contain the debt crisis and structural reforms aimed at restoring financial health. In the US, an extension of payroll tax relief and unemployment benefits averted excessive fiscal tightening that would have damaged the US economy. Growth in the largest economy was now seen at 2.1 percent this year and 2.4 percent the following year, up from the prior estimates of 1.8 percent and 2.2 percent, respectively. “The main concern is that the global economy will continue to be susceptible to major downside risks... and that the recovery will remain anemic in the major advanced economies,” the IMF said in its World Economic Outlook report. “These challenges call for more policy action, especially in advanced economies,” and include “resolving the euro area crisis without delay.” The IMF raised its growth estimate for the advanced economies to 1.4 percent for 2012, including a contraction of 0.3 percent in the 17-nation eurozone. Growth would pick up to 2.0 percent in 2013, when the single-currency bloc was expected to post a 0.9 percent recovery rate.
