The IMF and the Institute of International Finance (IIF) have substantially revised down their growth forecasts in oil importing countries in the MENA region. The downward revisions were a result of economic indicators pointing toward a slower than expected recovery and the intensification of the sovereign debt and banking crisis in Europe, according to a report from QNB Capital. The IMF forecast in its September 2011 edition of the World Economic Outlook that global real GDP would expand at 4 percent in 2011 and 2012, down from a previous forecast in June of 4.3 percent for 2011 and 4.5 percent for 2012. In April, the IMF forecast that oil importing MENA countries would grow by 1.9 percent in 2011 and 4.5 percent in 2012. These forecasts were cut substantially to 1.4 percent and 2.6 percent respectively in the IMF's October regional outlook. Similarly, the IIF cut its growth forecasts for oil importing countries in MENA from 4.2 percent to 2.3 percent for 2012 (the IIF has not included Libya, Sudan and Yemen in its MENA forecasts while the IMF includes these countries and also Iran). The IMF and the IIF have kept their forecasts for growth for oil exporting countries unchanged for 2011 and have only cut them by 0.2 and 0.3 percentage points respectively for 2012, noting that the weak global growth expectations had a minimal effect on the outlook for them. MENA oil exporters have been well protected from global economic woes. However, a combination of a slowdown in global growth leading to lower oil prices and greater limitations on external financing could seriously undermine the outlook, even for MENA oil exporters. In the most extreme scenario, sovereign defaults in Europe could lead to a second financial crisis, freezing global credit, leading to world recession and a collapse in oil prices.
