Gulf Cooperation Council (GCC) countries are expected to witness economic growth of 4.9 percent this year on the back of higher oil prices, while the oil-importers would experience a dramatic slowdown, the International Monetary Fund said Wednesday. The IMF's Regional Economic Outlook for the Middle East and Central Asia, projects overall growth in the Middle East and North Africa region, including Afghanistan and Pakistan, at 3.9 percent in 2011, down from 4.4 percent in 2010. The report said several countries have stepped up oil production temporarily in response to higher oil prices and shortfalls in production from Libya. At current projected oil prices and levels of production, revenue gains will more than offset the high levels of public spending. In 2011, the oil exporters' combined external current account balance is expected to increase from $202 billion to $334 billion (excluding Libya), and from $163 billion to $279 billion for the GCC. The report said it saw a continued gradual recovery in GCC banks, which had capital adequacy ratios in excess of 15 percent and nonperforming loans below 10 percent. Masood Ahmed, director of the IMF's Middle East and Central Asia Department, said: “Since the beginning of this year, a deterioration in the international economic outlook and the buildup of domestic social pressures have resulted in an economic slowdown in many of the region's oil-importing countries. But we should not lose sight that the ongoing historical transformation holds the promise of improved living standards and a more prosperous future for the people in the region.” Economic activity in the region's oil-exporting countries has clearly improved, bolstered by continued high energy prices, the IMF added. But private sector credit growth remains cautious. Looking ahead, the IMF's assessment predicts a moderation in growth for the region's oil exporters to about 4 percent in 2012. “Undoubtedly, the year ahead will be challenging for many countries, with continued political uncertainty, a deteriorating global economic outlook, and higher financing costs impeding a quick economic recovery,” Ahmed said.
