THE ARAB MONETARY FUND LAUNCHES THE APRIL EDITION OF THE ARAB ECONOMIC OUTLOOK, INCLUDING FORECASTS OF MACROECONOMIC PERFORMANCE IN THE ARAB COUNTRIES FOR THE YEARS 2019 AND 2020

by **claud39** Thu Apr 11, 2019 8:22 am

THE ARAB MONETARY FUND LAUNCHES THE APRIL EDITION OF THE ARAB ECONOMIC OUTLOOK, INCLUDING FORECASTS OF MACROECONOMIC PERFORMANCE IN THE ARAB COUNTRIES FOR THE YEARS 2019 AND 2020
2019-04-11

Arab Monetary Fund

The ninth edition of the Arab Economic Outlook is published, including forecasts of macroeconomic performance in the Arab countries for the years 2019 and 2020

Arab economies are expected to grow by 3.1 per cent in 2019 and 3.4 per cent in 2020

The positive impact of fiscal reform programs is expected to continue to contain the combined budget deficit of Arab countries at 5.5 per cent of GDP in 2019

The surplus in the current account balances of the Arab countries is stabilized at a level of 1.6 per cent of GDP in 2019 and 2020

High unemployment rates are the most important challenges facing the Arab countries, while the global transformations impose a new dimension of the phenomenon and necessitate the rapid reform of education systems and labor markets according to forward-looking visions

As part of the Arab Monetary Fund's efforts to support decision-makers in Arab countries, the Fund launched the April edition of the Arab Economic Outlook , which includes an update of the economic performance forecasts of Arab countries on several fronts, including economic growth, trends in domestic prices, And the outlook for the external sector in the Arab countries during the years 2019 and 2020.

The report pointed out that the growth rate of the global economy and international trade activities are expected to slow in 2019 and 2020 in view of the potential risks of the effects of trade tensions among major economies, policy uncertainties, increasing levels of global debt and the impact on trade, investment and industrialization activities, In 2019. The report emphasized that those challenges required high-level global policy coordination to overcome the potential impacts of those risks and to avoid sharp slips of global economic growth, international trade and access to a global multilateral system Flexibility and responsiveness that further enhance the ability of the countries of the world to achieve the goals of sustainable development, particularly with regard to the fight against poverty, climate change and the sustainability of consumption and production systems.

In the international oil markets, signs indicate an expected slowdown in demand for oil during 2019 and 2020 due to weak global economic activity and international trade. On the supply side, the supply of non-OPEC oil, particularly from the United States, is expected to continue to increase. Consequently, supply of oil is expected to continue to exceed demand levels within the forecast horizon. In this context, the Organization of Petroleum Exporting Countries (OPEC) and major oil producers decided to extend the oil production agreement by 1.2 million barrels per day (bpd) in the so-called "OPEC +" agreement from the beginning of 2019 for six months.

With regard to trends in the development of economic growth in Arab countries, Arab countries are expected to grow by 3.1% in 2019 and 3.4% in 2020, reflecting expectations that the growth rate of the Arab Petroleum Exporting Countries will continue to rise to about 2.8 and 3.1% In 2019 and 2020, respectively, amid an expected variation in trends in economic activity across the Group. In the GCC, growth is expected to continue driven mainly by improved activity in the non-oil sectors, benefiting from a number of factors, including the positive impact of a number of these countries moving ahead with strategies and visions for further economic diversification, Attracting business environments and stimulating domestic and foreign investments. While the oil sectors are expected to achieve relatively low growth rates in light of the expected slowdown in oil demand levels and the relatively low level of production under the OPEC + agreement during the first half of 2019. However, The oil and gas sector in a number of countries in the Group is benefiting from projects being undertaken to increase oil and gas production and refining capacity during the forecast horizon. Growth will also benefit from favorable monetary and fiscal policies supportive of economic growth. As a result, the group's growth rate is expected to rise to 2.7 per cent in 2019 and 3.0 per cent by 2020. Growth will also benefit from favorable monetary and fiscal policies supportive of economic growth. As a result, the group's growth rate is expected to rise to 2.7 per cent in 2019 and 3.0 per cent by 2020. Growth will also benefit from favorable monetary and fiscal policies supportive of economic growth. As a result, the group's growth rate is expected to rise to 2.7 per cent in 2019 and 3.0 per cent by 2020.

In other Arab oil-exporting countries, relative macroeconomic performance is expected to improve, with expectations of continued positive impact of relative stability in some of the Group's countries and the start of reconstruction efforts. The improvement in domestic conditions will also help to focus these countries on restoring some of the previous levels of oil production before 2011, and continuing to improve the infrastructure for producing and exporting oil and increasing production capacities. Based on the above, the Group's growth rate is expected to increase to 3.1 and 3.8 per cent during 2019 and 2020.

In the Arab countries importing oil, high growth is expected to continue in these countries due to the continuation of the economic reform process. The countries of the group are more focused on the reforms of achieving high-level conduit growth with the necessary policies to support the education and health sectors. Job opportunities, and increase productivity and competitiveness, thereby contributing to the further fruits of economic reform over the medium term. As a result, high growth in Arab oil importing countries is expected to continue at 4.1 percent and 4.3 percent respectively in 2019 and 2020.

The report pointed out that the most important policy priorities for the Arab countries is to create more jobs to meet the challenge of unemployment in light of the high rate of unemployment in the Arab countries to almost double the rate of global unemployment. The unemployment challenge in the Arab countries is concentrated in the youth sector, especially females, where the unemployment rate among young people rises to 26 per cent according to the World Bank, which is also twice the global average. Young female unemployment is at the highest level Globally is 40 per cent compared to 15 per cent for the world average. The potential repercussions of the Fourth Industrial Revolution and the subsequent technical developments increase the size of the challenges facing Arab countries in the future.

With regard to trends in the development of domestic prices, the inflation rate in Arab countries is expected to decline to 9.3 per cent and 8.1 per cent during 2019 and 2020, respectively, as a result of the low rate of inflation in the Arab oil-exporting countries to 6.1 per cent and 5.9 per cent respectively In 2019 and 2020. At the sub-group level, inflation in the GCC is expected to fall to around 1.3 per cent in 2019, while inflation is expected to be about 1.6 per cent by 2020. In other oil-producing countries, Inflation to about 6.3 percent in 2019. It is expected to reach about 6.5 percent by 2020.

In the group of Arab oil-importing countries, inflation is expected to fall to about 11.8 percent in 2019 and 9.9 percent in 2020.

With regard to monetary conditions, it is expected that during the years 2019 and 2020, monetary conditions in Arab countries will be affected by economic trends, external demand levels and monetary policy in the United States and the European Union. In this context, the return of traditional monetary policy in the United States and the euro area is expected to have implications for monetary conditions in countries that adopt fixed exchange rate regimes, which will affect the cost of domestic and external financing and capital flows. In countries with more flexible exchange rates, improved monetary conditions in some will remain linked to improved external demand levels, which will support net foreign assets, help to provide domestic credit and reduce interest rates, and help reduce pressures in the foreign exchange market.

Arab monetary policy reforms focus on increasing monetary policy efficiency levels in achieving their objectives by developing some of the existing monetary policy instruments, introducing new monetary instruments to ensure liquidity management and increasing the efficiency of operational frameworks for monetary policy. Central bank interventions also focused on ensuring the stability of foreign exchange markets and continuing efforts to promote financial stability. There has also recently been a clear interest by central banks and Arab monetary institutions to explore the possibilities of using modern financial technologies (Fintech) to increase the efficiency of financial services and support financial inclusion. This has reflected the interest of many central banks and Arab monetary institutions recently in the adoption of Sandboxes, which provide a supportive framework for financial technology companies. In these environments, the use of the techniques of "

With regard to the financial situation, the combined budget deficit of the Arab countries as a percentage of GDP is expected to decrease to 5.5% in 2019, reflecting the expected impact of the fiscal reforms adopted during the forecast horizon. In this context, Arab countries will continue to forecast their efforts to control public budgets, ensure public debt sustainability through medium-term fiscal reform programs, focus on enhancing and diversifying public revenue sources, controlling and raising public expenditure levels, and adopting medium-term frameworks including Which aims to reduce public budget deficits and put the public debt in downward paths. This is expected to balance the balance of public budgets in a number of Arab countries during the horizon until 2023. On the level of public revenues, the Arab oil countries, especially the GCC countries, have been keen to adopt measures to diversify their public revenues through policies to stimulate non-oil revenues through taxation and to review government service fees. Oil-importing countries have also made significant progress in tax reform and have adopted policies to improve tax administration, combat tax evasion and introduce electronic billing or tax collection.

On the public expenditure side, Arab countries are implementing reform policies aimed at rationalizing public expenditure through reordering spending priorities as well as restructuring ministries and official institutions, while other Arab countries continue their efforts to review their subsidy policies aimed at reforming commodity support and orientation systems Rather than to reform and strengthen social protection networks and monetary targeting of eligible groups. The reforms also seek to increase resources directed to investment spending through the implementation of projects to partner with the private sector in the field of infrastructure and the provision of government services.

On the external sector, the current account surplus is expected to stabilize at around 1.6 per cent of GDP in 2019 and 2020. On the level of the Arab countries exporting oil, is expected in accordance with the expected changes in world oil prices and levels of production, and the improvement of non-hydrocarbon exports and the occurrence of a limited reduction in the current account surplus of this group of countries during 2019, 2020.

In the oil importing countries, the deficit in the current account of this group of countries is expected to shrink in the forecast horizon, benefiting from the improvement in the exports of some of the countries of the Group, reflecting their increased levels of competitiveness following the adoption of more flexible exchange rate systems. Tourism sector and some other service sectors. The current account deficit of that group of countries is expected to shrink by 6.8 per cent to about $ 34.3 billion, representing about 5.6 per cent of the GDP of that group of countries in 2019. As for the forecast for 2020, The current account balance of this group of countries is about $ 33.6 billion, equivalent to about 5 per cent of GDP.

Full report

https://www.amf.org.ae/ar/content/%D8%AA%D9%82%D8%B1%D9%8A%D8%B1-%D8%A2%D9%81%D8%A7%D9%82-%D8%A7%D9%84%D8%A7%D9%82%D8%AA%D8%B5%D8%A7%D8%AF-%D8%A7%D9%84%D8%B9%D8%B1%D8%A8%D9%8A-%D8%A3%D8%A8%D8%B1%D9%8A%D9%84-2019

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