The fall meetings of the International Monetary Fund and the World Bank ended yesterday after they dealt with the most prominent global issues, whether related to the global economy or the economies of the Middle East and world regions.
Although the IMF maintained its growth forecast for the global economy at 3.2% during the current year, it lowered its growth forecast for some advanced economies in the world, but its raising of the growth forecast for the US economy (the largest economy in the world) contributed to stabilizing growth forecasts for the current year.
The Fund expects global inflation to decline from an annual average of 6.7% in 2023 to 5.8% in 2024 and 4.3% in 2025, with advanced economies returning to inflation targets sooner than emerging markets and developing economies.
Disruptions in the production and shipping of commodities, especially oil, particularly in the Middle East, and conflicts and civil unrest in emerging market and developing economies, have reduced growth prospects for the economies of the Middle East, Central Asia and Sub-Saharan Africa.
The Red Sea is witnessing attacks by the Yemeni Houthi group on ships that they say are heading to Israel, in an expansion of the repercussions of the war on the Gaza Strip. The targeting circle has expanded to include ships belonging to countries that formed an alliance to strike the Houthis to discourage them from targeting ships.
The Fund raised growth forecasts for emerging Asian economies, as growing demand for semiconductors and electronics boosted growth, driven by significant investments in artificial intelligence, but there is a continuing challenge of aging populations and weak productivity that may hinder growth in many economies.
The Middle East
In its Global Growth Prospects report, the Fund lowered its forecast for economic growth in the Middle East and North Africa region to 2.1% during 2024, down from 2.2% expected last July, but raised its forecast for growth over the next year to 4% from 3.9% that was expected.
- The Fund expected the Saudi economy to grow by 1.5% in 2024 and 4.6% in 2025.
- The Fund expects the UAE economy to grow by 4% this year and 5.1% in 2025.
- Algeria’s economy is likely to grow by 3.8% in the current year and 3% in the next year.
- Iraq’s economy is expected to grow by 0.1% in 2024 and 4.1% next year.
- According to the Fund, Qatar’s economy is expected to grow by 1.5% in 2024 and 1.9% next year.
- The Fund estimated that Kuwait’s economy would contract by 2.7% in the current year and grow by 3.3% next year.
- According to the Fund, the Sultanate of Oman’s economy will grow by 1% in the current year and 3.1% in the next year.
- The Fund expected that Bahrain’s economy would grow by 3% in the current year and 3.2% in the next year.
- The international organization expected that Egypt’s economy would grow 2.7% in 2024 and 4.1% next year.
- According to expectations, the Moroccan economy will grow 2.8% in 2024 and 3.6% next year.
- Tunisia’s economy is also expected to grow by 1.6% this year.
- The Fund expects that Sudan’s economy will shrink by 20.3% in the current year and grow by 8.3% in the following year.
- Jordan’s economy is expected to grow by 2.4% this year and 2.9% in the next year.
- Mauritania’s economy is expected to grow by 4.4% this year and 4.2% next year.
The International Monetary Fund’s chief economist, Pierre-Olivier Gorinchas, said earlier in the meetings that progress in curbing inflation was more evident in advanced economies such as the United States, while it would take longer in countries in the Middle East and sub-Saharan Africa regions that face price increases. With numbers in the tens place.
Gourinchas added, in a press conference, that the risks of recession in the United States are declining because the strong economic performance of the United States is driven by improved productivity and labor availability due to the influx of immigrants.
Israel
During the meetings ending on Saturday, the Fund reduced its expectation for the growth of Israel’s economy to 0.7% during the current year from 1.6% that was expected last April under the pressure of military expenditures for its war on Gaza and Lebanon.
The bank expects Israel to use higher government spending in the short term to support the economy and cover the military costs of the war, according to the World Economic Outlook report issued yesterday evening.
The Fund’s forecasts are subject to increasing uncertainty due to the war, and may therefore be subject to revisions, according to the report, which expected Israel’s economy to grow by 2.7% next year and 3.4% in 2029.
Global economy
Fund Director Kristalina Georgieva called on Friday for governments around the world to rebuild their financial capabilities, noting that central banks must think carefully about the timing of lowering interest rates.
She pointed out in a conference during the annual meetings of the International Monetary Fund and the World Bank, “In the short term, the focus must be on the financial aspect as an immediate priority. Financial reserves have been exhausted, yet financial pressures are high.”
She added that central banks must “remain vigilant, be evidence-based and monitor data carefully to ensure they” do not cut interest rates either too early or too late.
Georgieva warned that the world was in danger of falling into a path of low growth and high debt, leaving governments with fewer resources to improve opportunities for their people and address climate change and other challenges.
She said that the result is an increase in people’s dissatisfaction.
In a related context, the Fund expected, prior to the meetings, that the total global public debt would exceed $100 trillion this year for the first time and may grow more quickly than expected. Political discourse has become more directed at increasing spending at a time when slow growth leads to higher borrowing needs and costs.
The latest issue of the International Monetary Fund’s Fiscal Monitor report showed that global public debt will reach 93% of global GDP by the end of 2024 and approach 100% by 2030.
This rate exceeds the peak of 99% recorded during the Corona pandemic.
