Dubai: A global economic slowdown combined with falling oil prices are expected to ease the Gulf’s economic growth, according to the International Monetary Fund’s latest regional economic outlook. The IMF has forecast economic growth for the Gulf would slip to 6.6 per cent in 2009 from its forecast of forecast 7.1 per cent in 2008.“So far, regional economies and financial systems have been largely resilient to the international credit crisis. However, it will be imprudent to assume that the region will be insulated from the global crisis,” Mohsin Khan, Director of the Middle East and Central Asia Department told Gulf News on Monday.
The IMF has forecast the UAE’s real GDP to contract one per cent from the earlier projection of seven per cent in 2008 to six per cent in 2009. While Saudi Arabia is expected slowdown by 1.6 per cent to 4.3 per cent in 2009, Oman’s annual GDP growth is expected to slowdown from 7.4 per cent this year to six per cent next year.
“Some slowdown is inevitable as oil prices slip,” said Khan. However, he said the Gulf would continue to experience double-digit inflation.
“Although the growth is slowing, inflation is likely to remain high as high international food prices and housing shortages combined with expansionary monetary policy to fight the slowdown will keep inflation in double digits,” he said.
The UAE’s inflation, estimated at 11.1 per cent last year, is projected at 12.9 per cent in 2008 and 10.8 per cent in 2009. Qatar’s annual inflation rate, historically the highest in the region, is projected to hit 15 per cent this year and is expected to ease to 13 per cent next year.
According to the IMF, despite slowing growth and the credit squeeze, the Gulf’s economies and financial systems are not facing systemic risks.
Banking sectors in the region generally remain sound with continued improvements in prudential indicators and strengthened banking supervision, although liquidity pressures have emerged in a few countries, the IMF report said. (By Babu Das Augustine, Banking Editor, Gulf News, UAE)