KHALEEJ TIMES, Sunday, Jan 12, 2020 | Jamadi Al
Awwal 17, 1441
World Bank slashes UAE, GCC, Mena growth forecast
The World Bank, on Wednesday, slashed the growth forecast for the UAE, GCC, and
Middle East and North Africa (Mena) region for 2020 and 2021, due to
geopolitical tensions and lower oil demand amidst a weakened global growth.
It slashed the UAE's growth estimates for 2019, 2020, and 2021 by 0.8 per cent,
0.4 per cent, and 0.2 per cent respectively, from its June 2019 forecast. In its
January 2020 Global Economic Prospects report, released late on Wednesday, the
World Bank predicted the UAE's growth at 1.8 per cent for 2019, but said that it
will pick up over the next three years and expand at 2.6 per cent in 2020 and
3.0 per cent for 2021 and 2022.
Growth projections for Saudi Arabia, Qatar, Oman, Kuwait, and Bahrain were also
lowered by the World Bank. Overall, GCC countries are set to grow for 2019,
2020, and 2021 by 1.3 per cent, 1.0 per cent, and 0.1 per cent, respectively.
Similarly, the Mena region's growth rate has also been slashed by the World Bank
for 2019 and 2020, but 2021's rate remains unchanged.
"Geopolitical and policy constraints on oil sector production slowed growth in
oil-exporting economies, despite support from public spending. Risks are tilted
firmly to the downside-geopolitical tensions, escalation of armed conflicts,
slower-than-expected pace of reforms, or weaker-than-expected growth in key
trading partners could heavily constrain activity," the World Bank said in its
The key reason for the slowdown in growth of the Mena region is blamed on a
sharp contraction in the Iranian economy. The World Bank said that public
spending has been roust in some oil-exporting countries, while non-oil activity
has also shown supportive signs, but these developments were insufficient to
offset the weak activity in the oil sector.
It said that banking systems in the GCC remain broadly resilient, with capital
adequacy ratios generally sound and non-performing loan ratios contained.
"Medium-term growth prospects for the Mena region are contingent on an
attenuation of armed conflicts, and on limiting their regional spillovers," said
Oil prices averaged $61 a barrel in 2019, a 10 per cent fall from 2018 and $5 a
barrel below previous projections. "Oil prices are forecast to decline slightly
to an average of $59 per barrel in 2020 and 2021. US supply is expected to
continue to increase in 2020 as new pipeline capacity comes onstream," it added.
World Bank cuts
global growth forecast
The World Bank, on Wednesday, slashed the global economic growth forecast by 0.2
per cent for this year, and the next, from its previous forecast released in
The global economy is now projected to grow 2.5 per cent in 2020, 2.6 per cent
in 2021, and 2.7 per cent a year later.
Similarly, it slashed growth forecasts for advanced and emerging economies
including the Euro area, China, India, Pakistan, and a number of other
"With growth in emerging and developing economies likely to remain slow,
policymakers should seize the opportunity to undertake structural reforms that
boost broad-based growth, which is essential to poverty reduction," said Ceyla
Pazarbasioglu, vice-president for Equitable Growth, Finance and Institutions at
the World Bank Group.
"Steps to improve the business climate, the rule of law, debt management, and
productivity can help achieve sustained growth," she said.