DUBAI, United Arab Emirates ( Associated Press) — The world’s economy is forecast to grow by about 3.6% this year, but Arab oil exporters are seeing an unexpected downturn from higher energy prices that will buoy their economies this year and next. will replenish their financial reserves. According to a report released by the International Monetary Fund on Wednesday.
However, the most affected are oil importers in the Middle East and countries such as Egypt which are heavily dependent on food imports from the Black Sea region.Where Russia’s invasion of Ukraine has affected exports such as sunflower oil, barley and wheat around the world.
Wheat prices soar as farmers in Ukraine due to war They were forced to take up arms, stop farming, or export their grain due to closed ports and roads.
Higher energy prices, however, spell luck for oil producers in the region such as Saudi Arabia, where economic growth is expected to reach 7.6% this year.
Kuwait, another country that is highly dependent on oil revenues, is projected to see 8% growth in 2022, a marked reversal from only 1% growth in its economy last year and a nearly 9% contraction in its economy in 2020. IMF figures forecast Iraq will see the biggest expansion of its economy in the region, projected to grow by 9.5% this year.
Overall, the IMF expects that over the next five years, additional flows and financial reserves to Middle East oil exporting countries will exceed $1 trillion, said Jihad Azor, director of the Middle East and Central Asia Department at the IMF. The Associated Press.
The IMF’s projections are based on several assumptions, including an average oil price of $107 a barrel in 2022 and around $92 a barrel in 2023.
Gulf Arab oil exporting states are projected to produce about 18 million barrels of oil per day this year, of which about 14 million barrels are for export. Most of the barrels will be produced and exported by Saudi Arabia.
Rystad Energy, a research and business intelligence company, says Saudi Arabia will be the biggest beneficiary of higher oil prices and is expected to receive more than $400 billion from its oil and gas exports, an increase of nearly $250 billion from 2021. . The firm said Iraq is with about $200 billion, which is twice its income as of 2021.
Additional financial flows are important for Gulf Arab countries as they try to move their economies away from reliance on oil for state spending and the world seeks green technologies for the power industry.
In countries where absolute power is concentrated in the hands of hereditary rulers, inflows to provide handouts to the masses are also important. Saudi Arabia’s King Salman this week announced a package of more than half a billion dollars of Social Security payments to Saudis for the needs of the holy Muslim month of Ramadan, which ends this week. Individuals will receive $267 for their dependents and an additional $133.
The kingdom runs a separate “citizen account” program with about 10 million beneficiaries – roughly half of the Saudi population. The objective of the program is to reduce the financial burden on citizens and provide assistance to families with limited income. Average support per household totaled $285 in April. Since its inception in early 2017, the program has disbursed $31 billion.
In contrast, countries such as Syria and Lebanon are in such a severe economic crisis that the IMF has no economic projections for both. Syria has been plagued by civil war for more than a decade. Lebanon is mired in a political stalemate with its last economic data recorded by the IMF in 2020 showing a 22% contraction of the economy that year.
The situation is particularly dire for Sudan as well., where consumer price inflation is projected to reach 245% this year. Last year, the figure jumped to 359%, which has skyrocketed since the country’s 2019 revolution.
Egypt, the region’s most populous country, faces a number of hurdles, although the IMF expects its economy to grow by about 6% this year, before reaching a percentage of growth of about 5% in 2023. .
“Egypt was one of the countries directly affected by the war in Ukraine,” Azor said.
Higher wheat prices are expected to increase import bills for countries in the Middle East by around $9 billion and for Egypt by between $1 billion and $2 billion.
With inflation in Egypt expected to reach 10.4% this year, the government eased exchange rates and the currency depreciated by 15% in recent weeks. It also capped the price of non-subsidized bread to prevent it from rising.
Egypt has since reached out to the IMF to locate additional funding. Earlier this month, Saudi Arabia, the United Arab Emirates and Qatar pledged nearly $22 billion to Egypt to support its struggling economy. Of this, about $5 billion were Saudi deposits in Egypt’s central bank. The rest came in the form of investment deals from the UAE and Qatar.
The regional outlook by the IMF comes after the lender released its global forecast earlier this month. It downgraded the outlook for the world economy In January this year, up 3.6% from an estimated 4.4% in 2022, blamed Russia’s war in Ukraine for disrupting global commerce, pushing up oil prices, threatening food supplies and increasing uncertainty amid the coronavirus.