## Global Developments: Implications for the Middle East, North Africa, Afghanistan and Pakistan Region

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**Canonical URL:** [Global Developments: Implications for the Middle East, North Africa, Afghanistan and Pakistan Region](https://www.imf.org/-/media/files/publications/reo/mcd-cca/2018/may/english/menap0518-globaldevelopments.pdf)

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### Global growth and outlook
- Global growth continued to strengthen in the second half of 2017 and is now estimated at 3.8 percent for the full year, the highest level since 2011 and 0.2 percentage point stronger than forecast in the October 2017 World Economic Outlook.
- Growth is projected to strengthen further to 3.9 percent in 2018 and in 2019, also 0.2 percentage point higher than anticipated in October.
- Stronger prospects for the euro area should benefit the MENAP region, especially oil importers, through higher exports.
- The region should also benefit from a marginal strengthening of the outlook for China, a key partner for the region.
- However, the global outlook entails higher global interest rates as monetary policy continues to normalize in advanced economies, which could:
  - increase fiscal vulnerabilities in the MENAP region, and
  - tighten credit conditions, especially if global financial conditions tighten more than expected.

### Risks to the outlook
- Risks to the global outlook are broadly balanced in the near term, but are skewed to the downside over the medium term.
- Specific downside risks highlighted:
  - the risk of tighter financial conditions,
  - escalating import tariffs or a shift toward inward-looking policies that could harm international trade, reduce global growth, and dampen commodity prices,
  - worsening geopolitical tensions and conflicts, to which the region remains exposed.

### Oil prices and assumptions
- The outlook for oil prices remains highly uncertain, largely reflecting supply-side uncertainty.
- Oil prices grew strongly in the second half of 2017, rising above $65 a barrel in January, supported by:
  - the improved global growth outlook,
  - extension of the OPEC+ agreement (limiting oil production through the end of 2018),
  - unplanned outages, and
  - geopolitical tensions.
- More recently, with rapidly rising US shale production, the price of oil has edged down.
- In this context, while the oil price assumptions for 2018 and 2019 have been revised upward relative to the October 2017 Regional Economic Outlook: Middle East and Central Asia, the medium-term outlook for oil prices remains subdued.

### MENAP region growth projections (Real GDP Growth, 2016–19)
- World: 2016 = 3.2; 2017 = 3.8; 2018 = 3.9; 2019 = 3.9
- MENAP: 2016 = 4.9; 2017 = 2.6; 2018 = 3.4; 2019 = 3.7
- MENAP Oil Exporters: 2016 = 5.4; 2017 = 1.7; 2018 = 2.8; 2019 = 3.3
  - Of Which: Non-Oil GDP Growth: 2016 = 0.8; 2017 = 2.6; 2018 = 3.2; 2019 = 3.4
- MENAP Oil Importers: 2016 = 3.7; 2017 = 4.2; 2018 = 4.7; 2019 = 4.6

*Middle East and Central Asia Department — REO Update, May 2018*

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_Source: https://www.imf.org/-/media/files/publications/reo/mcd-cca/2018/may/english/menap0518-globaldevelopments.pdf_