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The IMF has released its latest edition of the World Economic Outlook (WEO) and has revised down its projections for 2013 global growth by 0.2% points to 3.3%, yet again pushing back the expected recovery. The IMF’s forecasts for 2013 growth were revised down in each of its last three quarterly updates to the WEO, from a peak forecast of 4.1% made a year ago. The IMF now does not expect the global economy to achieve 4% growth until 2014.
However, according to QNB Group, with growth in the world’s largest economies slowing, the IMF outlook for 2013-14 may be too optimistic and the trend of downward revisions to forecasts is likely to continue. The Eurozone continues to languish in recession with growth contracting at an annualised rate of 0.6% in Q4 2012 and expected to contract at the same rate in Q1 2013. Growth in China has been slowing consistently and Q1 2013 year-on-year growth of 7.7% disappointed as it was below expectations of 8.0%. After weak annualised growth of 0.4% in Q4 2012, the US recovered in Q1 2013 to 3.0%, driven by stronger consumer spending. The US is a prime candidate for driving acceleration in global growth in 2013-14. However, the outlook remains unclear. The strong Q1 growth figures may just be a bounce back from a weak Q4 2012 and quarterly growth figures have been volatile in recent years.
 
en-IMF Outlook 1
 
The IMF expects the US economy to expand by 1.9% in 2013 and 3.0% in 2014 and the Eurozone to recover from a 0.3% contraction in 2013 to growth of 1.1% in 2014. As a result, Advanced Economies are expected to deliver overall growth of 1.2% in 2013 and 2.2% in 2014.
The outlook for Emerging Markets and Developing Economies is positive with a gradual pickup in growth from 5.1% in 2012 to 5.3% in 2013 and 5.7% in 2014. China and India are expected to drive this acceleration. India is expected to pick up from 4.0% in 2012 to 5.7% in 2013 and 6.2% in 2014 while China is expected to accelerate from 7.8% in 2012 to 8.0% and 8.2%. However, the outlook for China may need to be given its disappointing Q1 2013 GDP. Recent data has heightened concerns about the downside risks to China growth, mainly related to the banking sector, which has high levels of non-performing loans and is over-exposed to the indebted real estate sector.
In 2012, nearly every region covered by the WEO experienced a slowdown in growth. The only regions with accelerating growth were MENA and the “ASEAN-5” (Indonesia, Malaysia, Philippines, Thailand and Vietnam). MENA accelerated from 4.0% in 2011 to 4.8% in 2012, despite political transitions in a number of countries. Meanwhile, ASEAN-5 growth accelerated from 4.5% to 6.1%. However, the IMF expects growth to decelerate in 2013 in both regions, dropping to 3.1% in MENA and 5.9% in the ASEAN-5.
Within MENA, growth in oil exporting countries has been stronger than in oil importers. However, hydrocarbon production is likely to level off in 2013, putting a cap on regional growth. Saudi Arabian crude oil production averaged 9.5m barrels per day in February 2013, down from its highs of over 10m in 2012 when production was ramped up to ensure oil markets remained well supplied. The completion of the current phase of Qatar’s LNG expansion programme is another important factor in the levelling off in growth in MENA oil and gas exporters.
Despite the regional instability caused by the ongoing crisis in Syria, oil importers are bouncing back slightly from the negative impact on growth of their political transitions. Growth in this group of countries picked up from 1.4% in 2011 to 1.9% in 2012 and is expected to rise further, although there remains considerable downside risks associated with the uncertainties of political transition. Growth may be being helped by some positive indicators such as a recovery in tourism Tunisia and better-than-expected agricultural harvests in Sudan.
 
ar-IMF Outlook 2
 
Therefore, the difference between growth rates of oil exporters and importers is likely to narrow in 2013-14. MENA oil exporters are expected to grow by 3.2% in 2013 and 3.7% in 2014 while oil importers are expected to grow by 2.7% and 3.7%. This convergence will be encouraged by the expected downward trend in oil prices, which the IMF expect to be 2.3% lower in 2013 and a further 4.9% lower in 2014, on average. This would lower revenue for oil exporters, dampening economic performance, while it should reduce import costs for net importers, providing an economic boost.
 

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