The International Monetary Fund forecast real GDP growth in oil-exporting economies of the Middle East & North Africa (MENA) region to accelerate from 1.7% in 2017 to 2.8% in 2018, mainly due to a recovery in non-hydrocarbon sector activity as the pace of fiscal consolidation eases compared to previous years. It projected non-hydrocarbon sector activity in MENA oil exporters to increase from 2.6% last year to 3.2% in 2018. It forecast growth in Gulf Cooperation Council (GCC) economies at 1.9% in 2018 relative to a contraction of 0.2% in 2017, while it anticipated the region's non-oil sector activity to accelerate from 1.8% last year to 2.7% in 2018. Further, the IMF considered that downside risks to the MENA oil exporters' growth outlook consist of lower-than-anticipated oil prices, faster-than-expected tightening of global financial conditions, rising global trade tensions, and heightened geopolitical risks and regional conflicts.

In parallel, the Fund anticipated the slower but sustained fiscal consolidation efforts to ease the pressure on the fiscal balances of the region's oil-exporting economies this year, as it expected their fiscal deficit to narrow from 5.2% of GDP in 2017 to 3.8% of GDP in 2018. It forecast the GCC's aggregate fiscal deficit to narrow from 5.5% of GDP in 2017 to 3.4% of GDP in 2018. Further, it expected the aggregate public debt level of the region's oil exporters to increase from 33.4% of GDP at end-2017 to 36.9% of GDP at end-2018. It noted that the public debt of most MENA oil exporters has increased by an average of 10 percentage points of GDP annually since 2013, with countries financing large fiscal deficits through a combination of drawdowns of buffers and increased domestic and foreign borrowing. It projected the MENA oil exporters' cumulative fiscal deficits to reach $294bn in the 2018-22 period, while it forecast their government debt amortization at $71bn. It considered that countries are vulnerable to a sudden tightening of global financial conditions, given that the latter could add to interest payments and increase existing fiscal challenges.
Source: International Monetary Fund