MIDDLE EAST – The International Monetary Fund’s (IMF’s) latest World Economic Outlook, has lowered its prediction of the growth of the economy in the Middle East and Central Asia to 2.8% growth in 2020.
The new prediction is 0.1% lower than the previous economic outlook prediction of 2.9% in October 2019.
However, the IMF estimates the region will experience 3.2% growth in its economies in 2021.
According to the report—titled “Tentative Stabilization, Sluggish Recovery?”—the lower projected growth for the region “mostly reflects” a change in Saudi Arabia’s expected growth after oil producing countries in the OPEC+ group agreed to continue cuts to oil supply in December 2019.
IMF also projects “subdued” prospects for countries in Middle East and Central Asia with civil wars, citing Libya, Syria, and Yemen.
The multilateral finance institution also noted that Iraq and Lebanon, with ongoing protests, are also set to experience less growth.
Iran is also projected to perform dismally, amid increased tensions with the US.
Globally, the IMF predicts economies to grow by 3.3% in 2020, also 0.1% lower than predicted in the October 2019 report.
Increasing geopolitical tensions, particularly between the US and Iran, was the first of four main risks to the global economic outlook noted in the report.
The higher tariffs imposed by the United States goods from trading partners was a second major risk to global growth.
Additionally, the report noted that a general slowdown could also be triggered by more general risks ranging from rapid shifts in investments and tighter lending policies to weather-related disasters .
For developing countries with high debts, the IMF encouraged a consolidation of debt “by improving subsidy targeting, broadening the revenue base, and ensuring stronger compliance.”
At the same time, the IMF advised developing countries to focus on investing in health and education “to raise human capital” and “incentivizing entry of firms that create high value-added jobs and gainfully employ wider segments of the population.”
The January 2020 World Economic Outlook report comes out just one day before the World Economic Forum begins its meetings in Davos, Switzerland, on Tuesday, January 21.