LONDON: The International Monetary Fund (IMF) on Monday upgraded its forecast for world economic growth this year and next as global leaders and businesspeople descended on the Swiss mountain resort of Davos.
The IMF said that growth in the Middle East, North Africa, Afghanistan and Pakistan would pick up over the next two years, but would reman subdued at around 3.5 percent.
“While stronger oil prices are helping a recovery in domestic demand in oil exporters, including Saudi Arabia, the fiscal adjustment that is still needed is projected to weigh on growth prospects,” the Fund added.
IMF Managing Director Christine Lagarde warned of the risk that complacency might set in among the big economies with the revised growth forecasts, and urged governments and regulators to continue with the structural reforms prompted by the global financial crisis of 2009.
Maurice Obstfeld, the IMF’s economic counselor and director of research, told Arab News that the economic transformations under way in the region, and in Saudi Arabia in particular, would take longer to work through into faster growth prospects than the two-year time line covered by the IMF’s latest economic update.
“In the case of Saudi Arabia, we are talking about a strategy to reduce public sector influence by 2030, so it is just too soon for those measures to have a significant effect on our forecasts,” he said on the sidelines of the World Economic Forum annual meeting in Davos.
He restated the IMF’s view that all economies in the Middle East and North Africa — oil exporters as well as importers — have a lot further to go in cutting public sector dominance of their economies. “They have to further reuse the footprint of the public sector and that will take time,” he said.
The IMF raised its forecast for growth in global gross domestic product by 0.2 percentage points, to 3.9 percent for both years, from its assessment last October.
“The primary sources of GDP acceleration so far have been in Europe and Asia, with improved performance also in the US, Canada, and some emerging markets, notably Brazil and Russia,” Obstfeld said.
The IMF delivered its forecast against the backdrop of the opening of the World Economic Forum in Davos where 2,500 business leaders are expected to assemble this week.
US President Donald Trump is among the 70 heads of state or government attending the meeting, which will welcome the biggest ever involvement by politicians at Davos.
Question marks hung over the appearance of Trump at the event yesterday as the US government shutdown stretched into a third day.
A White House spokesman was on Monday quoted as saying the departure of the US delegation had been delayed.
IMF global growth forecast gives Davos an upbeat start
IMF global growth forecast gives Davos an upbeat start
