Oil to catalyse GCC growth: World Bank

Dubai - The forecast is based on an expected rise in oil prices to an average of $55 per barrel for the year.

Economic growth in the Middle East and North Africa is set to accelerate through 2018 following the bottoming out of oil prices in 2016 with all GCC countries with the only exception of Bahrain registering gains, the World Bank said.
The region's growth is forecast to recover modestly to a 3.1 per cent pace this year, with oil importers registering the strongest gains, the World Bank said in its January 2017 Global Economic Prospects report.

Among oil exporters, the UAE, the Arab world's second largest economy, is poised grow by 2.5 per cent in 2017 and three per cent in 2018 from 2.3 per cent in 2016, while Saudi Arabia is forecast to accelerate modestly to a 1.6 per cent growth rate in 2017 and 2.5 per cent in 2018. Qatar is expected to grow 3.6 per cent and 2.1 per cent in 2017 and 2018 respectively, while Kuwait is set to record 2.4 and 2.6 per cent GDP growth over 2017-18. Oman is to register 2.9 per cent and 3.4 per cent growth in the two years.
The World Bank said continued gains in oil production and expanding foreign investment are expected to push up growth in Iran to 5.2 per cent. The forecast is based on an expected rise in oil prices to an average of $55 per barrel for the year.

For oil exporting economies, despite robust growth in the Islamic Republic of Iran, the recovery will be slightly slower than expected in mid-2016, reflecting fiscal consolidation plans (GCC countries and Iraq) and oil production capacity constraints (Iraq).
Global economic growth is forecast to accelerate moderately to 2.7 per cent in 2017 after a post-crisis low in 2016, but efforts by the US President-elect Donald Trump to renegotiate trade deals and impose new barriers could set back the global economy, the World Bank warned.
Growth in advanced economies is expected to edge up to 1.8 per cent in 2017, said the report.  
"After years of disappointing global growth, we are encouraged to see stronger economic prospects on the horizon," World Bank Group President Jim Yong Kim said.
It noted that fiscal stimulus in major economies - particularly in the United States - could generate faster domestic and global growth than projected, although rising trade protection could have adverse effects. Growth in emerging market and developing economies as a whole should pick up to 4.2 per cent this year from 3.4 per cent in the year just ended amid modestly rising commodity prices.

The report noted that Trump's tax cuts and spending plans could deliver a shot in the arm to the US economy, lifting growth around the world, although uncertainty about his trade policies adds to the risks.
The Trump administration could squander the economic gains of fiscal stimulus if it imposes new trade barriers that provoke retaliation by other countries, the Washington-based development lender said.
Overall, it is too early to assess what the net impact will be of Trump's economic policies, the World Bank said. Accordingly, it left its forecast for US growth this year and next unchanged, at 2.2 per cent and 2.1 per cent, respectively. The outlook doesn't incorporate the expected effect of Trump's policy proposals, according to the report.
The World Bank estimates global growth will pick up to 2.9 per cent next year, also down 0.1 per cent from its June call.
The development lender sees the eurozone expanding at a 1.5 per cent rate this year with uncertainty lingering as the UK starts negotiations to withdraw from the European Union, which will weigh on growth this year and next.
Japan is seen growing 0.9 per cent this year, while China's output is set to expand 6.5 per cent.
 

US growth could accelerate to as much as 2.5 percent this year and 2.9 percent in 2018 if the Trump administration follows through on a pledge to cut the corporate income-tax rate from 35 percent to 15 per cent, and slash individual rates, the bank estimates.
"When you have this combination of tax cuts, you have a positive outcome on investment and personal consumption," Ayhan Kose, director of the bank's Development Prospects Group, said.
"The single most important issue we are focusing on in this report is the persistent investment weakness in emerging and developing economies," Kose said. "The issue is critical." "We can help governments offer the private sector more opportunities to invest with confidence that the new capital it produces can plug into the infrastructure of global connectivity," said World Bank Chief Economist Paul Romer.
- issacjohn@khaleejtimes.com