## MENAP Region Highlights ## Source details **Canonical URL:** [MENAP Region Highlights](https://www.imf.org/-/media/files/publications/reo/mcd-cca/2017/october/menap/5-menap-highlights.pdf) ## Other formats - [Markdown version](/-/media/files/publications/reo/mcd-cca/2017/october/menap/5-menap-highlights.pdf.md) - [Structured JSON version](/-/media/files/publications/reo/mcd-cca/2017/october/menap/5-menap-highlights.pdf.json) --- ### Overview: Growth and Outlook - Despite the strengthening global recovery, MENAP’s economic outlook remains relatively subdued owing to the adjustment to low oil prices and regional conflicts. - Regional growth: - MENAP growth in 2017: 2.6 percent (unchanged relative to the May 2017 Regional Economic Outlook: Middle East and Central Asia Update). - MENAP growth is about half of the 2016 outturn. - Medium-term prospects: - Growth is anticipated to accelerate gradually in most MENAP economies but, in many cases, will remain below what is needed to effectively tackle unemployment challenges. - Policy imperative: - Structural reforms need to be accelerated to take advantage of the strengthening global economy and to secure higher, more inclusive, and resilient growth. ### Oil Exporters: Fiscal Consolidation and Diversification - Primary challenges: - Continued adjustment to low oil prices has dampened growth and contributed to large fiscal and external deficits. - OPEC-led agreement to reduce oil production further holds down overall growth. - Regional projections and developments: - GCC overall growth expected to bottom out in 2017 at 0.5 percent as the OPEC-led deal reduces oil output. - GCC non-oil growth expected to recover to about 2.6 percent in 2017 and 2.4 percent in 2018 as fiscal consolidation generally slows. - Algeria growth expected to slow to 1.5 percent in 2017 and bottom out at 0.8 percent in 2018 before recovering over the medium term. - Iran growth projected to drop to about 3.5 percent in 2017 as the post-sanctions boost to oil output wears off. - Outlook for Iraq, Libya, and Yemen dominated by security conditions and oil-producing capacity. - Fiscal outcomes and advice: - Fiscal deficits across MENAP oil exporters jumped from 1.1 percent of GDP in 2014 to 10.6 percent of GDP in 2016. - Deficits expected to ease to 5.2 percent of GDP in 2017 on the back of a modest recovery in oil prices and significant deficit reduction efforts. - Recommendations: - Continue pursuing deficit-reduction plans to maintain fiscal sustainability and, where relevant, to support exchange rate pegs. - Identify additional fiscal consolidation measures where needed while protecting social and growth-oriented expenditures. - Further improve fiscal institutions and frameworks. - Speed up implementation of structural reforms to support diversification away from redistribution through public sector spending and energy subsidies. - Risks: - Growth risks for MENAP oil exporters remain tilted to the downside. - Considerable uncertainty surrounds the oil price outlook; on balance, risks from oil price volatility appear tilted more to the downside. - Downside risks also include regional conflicts and geopolitical developments, faster-than-expected normalization of U.S. monetary policy, and inward-looking policies by advanced economies. - Upside possibility: a stronger and more durable global recovery could contribute to higher growth. ### Oil Importers: Resilience, Inclusion, and Fiscal Vulnerabilities - Growth performance and projections: - Economic activity in MENAP oil importers projected to expand by 4.3 percent in 2017 (above the 3.6 percent outturn for 2016). - The 4.3 percent projection is mildly stronger than the 4 percent forecast in the May 2017 Regional Economic Outlook: Middle East and Central Asia Update. - Growth is forecast to accelerate in most oil importers, supported by domestic demand and exports. - Medium-term projections: - Growth reaching 4.4 percent in 2018. - Averaging 5.3 percent during 2019–22. - Caveat: This pace of growth will be insufficient to generate enough jobs to absorb current unemployed and millions of new job seekers over the period. - Fiscal and debt vulnerabilities: - Average fiscal deficit in MENAP oil importers expected to narrow from 6.8 percent of GDP in 2016 to 6.6 percent in 2017, and further to 5.6 percent in 2018. - Significant vulnerabilities persist due to weak domestic revenue mobilization and high current expenditures (subsidies and wages). - Public debt has risen to more than 50 percent of GDP for most countries. - Exacerbating factors include valuation changes from currency depreciation, rising interest payments, and lackluster growth. - Debt levels are expected to fall by 2022 in most countries given anticipated consolidation. - Recommended measures: - Sustained fiscal consolidation that carefully targets current expenditures to protect social spending. - Improve efficiency of public investment to mitigate contractionary effects on growth. - Structural reform priorities: - Accelerate reforms to enhance private sector activity and foster a more dynamic, competitive, and inclusive economy. - Improve the business environment, including the quality of infrastructure. - Labor market and education reforms, improving productivity, and enhancing access to finance. - Leverage the recently established Compact with Africa to address impediments. - Risks: - Balance of risks remains tilted to the downside: regional conflicts and security risks, social tension and reform fatigue, vulnerability of agricultural activity to weather and price developments. - Global risks include more rapid tightening of global financial conditions and inward-looking policies by advanced economies. - Upside: stronger-than-expected pickup in activity in the euro area and other trading partners would lift regional growth. ### Selected Economic Indicators (MENAP, 2000–18; Percent of GDP or percent where indicated) - MENAP (projections shown) - Real GDP (annual growth): 4.9 (Average 2000–13); 2.8 (2014); 2.7 (2015); 5.0 (2016); 2.6 (2017); 3.5 (2018) - Current Account Balance: 8.9 (Average 2000–13); 5.5 (2014); –3.7 (2015); –4.1 (2016); –1.9 (2017); –1.6 (2018) - Overall Fiscal Balance: 2.4 (Average 2000–13); –3.1 (2014); –8.6 (2015); –9.3 (2016); –5.7 (2017); –4.6 (2018) - Inflation (year average; percent): 6.9 (Average 2000–13); 7.0 (2014); 5.8 (2015); 5.7 (2016); 7.9 (2017); 6.9 (2018) - MENAP Oil Exporters - Real GDP (annual growth): 5.1 (Average 2000–13); 2.6 (2014); 2.1 (2015); 5.6 (2016); 1.7 (2017); 3.0 (2018) - of which non-oil growth: 6.9 (Average 2000–13); 3.9 (2014); 0.6 (2015); 1.1 (2016); 2.6 (2017); 2.5 (2018) - Current Account Balance: 12.9 (Average 2000–13); 8.8 (2014); –3.5 (2015); –3.6 (2016); –0.4 (2017); –0.2 (2018) - Overall Fiscal Balance: 6.2 (Average 2000–13); –1.1 (2014); –9.3 (2015); –10.6 (2016); –5.2 (2017); –4.1 (2018) - Inflation (year average; percent): 7.5 (Average 2000–13); 5.8 (2014); 5.4 (2015); 4.7 (2016); 4.4 (2017); 6.1 (2018) - Of which: Gulf Cooperation Council (GCC) - Real GDP (annual growth): 5.0 (Average 2000–13); 3.3 (2014); 3.8 (2015); 2.2 (2016); 0.5 (2017); 2.2 (2018) - of which non-oil growth: 7.0 (Average 2000–13); 5.4 (2014); 3.8 (2015); 1.8 (2016); 2.6 (2017); 2.4 (2018) - Current Account Balance: 16.6 (Average 2000–13); 14.4 (2014); –2.4 (2015); –3.4 (2016); 0.2 (2017); 0.0 (2018) - Overall Fiscal Balance: 10.0 (Average 2000–13); 2.1 (2014); –9.2 (2015); –11.9 (2016); –6.3 (2017); –5.0 (2018) - Inflation (year average; percent): 2.8 (Average 2000–13); 2.6 (2014); 2.5 (2015); 2.9 (2016); 0.8 (2017); 4.2 (2018) - Of which: Non-GCC oil exporters - Real GDP (annual growth): 5.2 (Average 2000–13); 1.7 (2014); 0.1 (2015); 9.5 (2016); 3.1 (2017); 3.8 (2018) - of which non-oil growth: 6.7 (Average 2000–13); 2.0 (2014); –3.4 (2015); 0.3 (2016); 2.6 (2017); 2.6 (2018) - Current Account Balance: 7.5 (Average 2000–13); –1.0 (2014); –5.3 (2015); –3.9 (2016); –1.6 (2017); –0.6 (2018) - Overall Fiscal Balance: 2.3 (Average 2000–13); –4.8 (2014); –9.3 (2015); –9.1 (2016); –4.1 (2017); –3.2 (2018) - Inflation (year average; percent): 13.5 (Average 2000–13); 9.6 (2014); 8.8 (2015); 6.7 (2016); 8.3 (2017); 8.3 (2018) - MENAP Oil Importers - Real GDP (annual growth): 4.5 (Average 2000–13); 3.2 (2014); 3.9 (2015); 3.6 (2016); 4.3 (2017); 4.4 (2018) - Current Account Balance: –2.4 (Average 2000–13); –4.2 (2014); –4.4 (2015); –5.3 (2016); –5.3 (2017); –4.8 (2018) - Overall Fiscal Balance: –5.5 (Average 2000–13); –7.3 (2014); –7.3 (2015); –6.8 (2016); –6.6 (2017); –5.6 (2018) - Inflation (year average; percent): 6.0 (Average 2000–13); 9.4 (2014); 6.7 (2015); 7.7 (2016); 15.0 (2017); 8.3 (2018) - MENA - Real GDP (annual growth): 4.9 (Average 2000–13); 2.6 (2014); 2.6 (2015); 5.1 (2016); 2.2 (2017); 3.2 (2018) - Current Account Balance: 9.6 (Average 2000–13); 6.0 (2014); –4.0 (2015); –4.4 (2016); –1.7 (2017); –1.3 (2018) - Overall Fiscal Balance: 3.2 (Average 2000–13); –2.9 (2014); –9.1 (2015); –10.0 (2016); –5.7 (2017); –4.5 (2018) - Inflation (year average; percent): 6.8 (Average 2000–13); 6.8 (2014); 6.0 (2015); 6.0 (2016); 8.4 (2017); 7.1 (2018) - Arab World - Real GDP (annual growth): 5.3 (Average 2000–13); 2.5 (2014); 3.4 (2015); 3.3 (2016); 2.0 (2017); 3.1 (2018) - Current Account Balance: 10.6 (Average 2000–13); 6.4 (2014); –5.0 (2015); –5.9 (2016); –2.8 (2017); –2.3 (2018) - Overall Fiscal Balance: 3.6 (Average 2000–13); –3.3 (2014); –10.7 (2015); –11.8 (2016); –6.6 (2017); –5.1 (2018) - Inflation (year average; percent): 4.1 (Average 2000–13); 4.8 (2014); 4.7 (2015); 5.3 (2016); 7.8 (2017); 6.4 (2018) *Source: IMF staff calculations and projections, as presented in the MENAP Region Highlights.* --- _Source: https://www.imf.org/-/media/files/publications/reo/mcd-cca/2017/october/menap/5-menap-highlights.pdf_