Muscat: The International Monetary Fund (IMF) on Monday projected a 2.6 per cent economic growth rate for the Middle East, North Africa, Afghanistan, and Pakistan region, against 5 per cent in 2016.
“The economies in the region are projected to slow considerably in 2017, reflecting primarily a slowdown in the activity of oil exporters, before recovering in 2018,” IMF said in its updated World Economic Outlook (WEO) released on Monday.
IMF report added that the region will post a 3.3 growth in gross domestic product in 2018.
The 2017–18 forecast is broadly unchanged relative to the April 2017 WEO, but the growth outcome in 2016 is estimated to have been considerably stronger in light of higher growth in Iran. “The recent decline in oil prices, if sustained, could weigh further on the outlook for the region’s oil exporters.”
The IMF kept its growth forecasts for the world economy unchanged for this year and next, although it revised up growth expectations for the eurozone and China.
In an updated World Economic Outlook published on Monday, the IMF said global gross domestic product would grow 3.5 per cent in 2017 and 3.6 per cent in 2018, unchanged from estimates issued in April.
"While risks around the global growth forecast appear broadly balanced in the near term, they remain skewed to the downside over the medium term," the IMF said in updated forecasts released in the Malaysian capital, Kuala Lumpur.
The IMF shaved its forecasts for US growth to 2.1 per cent for 2017 and 2018, slightly down from projections of 2.3 per cent and 2.5 per cent, respectively, just three months ago. The Fund reversed previous assumptions that the Trump administration's planned stimulus measures would boost US growth, largely because no details of those plans have been made public.
Maurice Obstfeld, the IMF's economic counsellor and director of research, said the global economy has been the subject of considerable protectionist rhetoric, such as President Donald Trump's proposed tariff on steel imported from China, but such talk had yet to translate into much action.
"What will happen in the future, we don't know. These threats are in our downside thinking. They're not built into our baseline (forecast) because hopefully they don't happen, but there are risks," Obstfeld told a news conference here.
The IMF said growth in the euro zone was now expected to be slightly stronger in 2018 and pointed to "solid momentum".
It upgraded 2017 GDP growth projections for the eurozone to 1.9 per cent, up 0.2 percentage point from April. The IMF said eurozone growth would be slightly stronger at 1.7 per cent, a 0.1-percentage-point change from just three months ago.
It said the expected higher growth in the eurozone indicated "stronger momentum in domestic demand than previously expected".
The IMF revised down its 2017 forecast for the United Kingdom by 0.3 percentage point to 1.7 per cent, citing weaker-than-expected activity in the first quarter. It left its 2018 forecast unchanged at 1.5 per cent.
The IMF said it expected slightly higher growth in Japan this year of 1.3 per cent, revised from a forecast of 1.2 per cent in April. It cited stronger first-quarter growth buoyed by private consumption, investment and exports. Its forecast for Japan's 2018 growth was unchanged at 0.6 per cent.
For China, the IMF expected stronger growth of 6.7 per cent in 2017, up 0.1 percentage point from the April forecast.
It said China's growth would still moderate in 2018 to 6.4 per cent, but noted that estimate was up 0.2 percentage point from the April forecast on expectations that Beijing would maintain high levels of public investment.
But Obstfeld expected China's economic expansion to slow down over the second half of 2017 as Chinese authorities looked to manage rapid credit growth and non-performing loans.
"In the first two quarters of this year, growth has come in very high. Part of this is the general upsurge in world growth and the upsurge in trade in Asia. But there is also a component that has been fuelled by expanding domestic credit, and that's the part that worries us," Obstfeld said.