The International Monetary Fund (IMF) on Thursday raised its forecast for economic growth in the Middle East to 4.2 percent next year, citing the rebound in oil prices and stabilization of the global economy. The increase of half a percentage point from the IMF's earlier estimate largely reflects the overall increase in crude oil prices, the dominant revenue source for many Middle Eastern economies. The IMF kept its 2009 projection for real gross domestic product growth in the region unchanged at 2 percent. Crude oil, which generates as much as 90 percent of various government's foreign revenue sources, has rebounded to around $70 per barrel in recent months after the Organization of the Petroleum Exporting Countries cut its oil output by 4.2 million barrels at the end of last year. The report offers another glimmer of light for a diverse region which has been able to weather the global economic meltdown better than many others. The IMF said that while the region's overall real GDP is forecast at 4.25 percent in 2010, oil importers are expected to see real growth of 4.5 percent, or more than triple the level of oil exporters which still are susceptible to volatility in the global oil market. Overall, global economic growth is forecast at 3.1 percent in 2010, with much of the recovery driven by emerging economies such as China and India But analysts had questioned whether that strength in the Middle East, in many cases built on oil-fueled cash surpluses, was sustainable. “The key risk to the outlook is the possibility that the global recovery may not be sustained and that oil prices may fall sharply, which could have important implications for oil exporters and their regional trading partners,” the report said. Falling oil prices could force Gulf nations to reduce their generous spending at home, and that in turn could lead to cutbacks in the amount of money guest workers - including many from other Middle Eastern countries - are able to send home, the IMF said. Of the oil exporters, Saudi Arabia was projected to realize the highest real GDP growth next year, at 4 percent. Iran, where sanctions are made even more painful by the poor state of the country's vital oil sector, is projected to see growth climb modestly from 1.5 percent in 2009 to 2.2 percent. The United Arab Emirates, home to the now struggling boomtown Dubai, is forecast to realize 2.4 percent in growth from a contraction of 0.2 percent in 2009. Much of the UAE's problems have rested with Dubai, where years of unrestrained growth came crashing down amid the collapse in credit markets. That forced the delays and cancellation of mega-projects and pushed property prices down by as much as 50 percent. Of the other countries in the region, Egypt, the Arab world's most populous nation, is projected to realize growth of 4.5 percent in 2010, down from 4.7 percent. Egyptian officials, however, have said they anticipate real GDP to grow by over 5 percent by the end of the fiscal year ending next June _ a level that remains far below the more than 7 percent growth the country achieved in 2006 to 2008. - AP The 2010 revision is 0.5 percent higher than its July forecast, the IMF said in its World Economic Outlook report. In comparison, emerging markets were given a 5 percent growth forecast for 2010.
