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GDP in the Middle East, is expected to rise 2.1 per cent this year, supported largely by firming global oil demand and easing domestic lockdowns, according to the World Bank.
"The recovery is contingent on containment of the pandemic, stabilising oil prices, no further escalation of geopolitical tensions and the assumption of a vaccine rollout in the second half of the year," the latest Global Economic Prospects report said.
For oil exporters, growth is expected to recover to 1.8 percent this year, on oil demand normalising, the scheduled easing of OPEC+ oil production cuts, policy support and the gradual loosening of domestic pandemic-related restrictions, it said.
The UAE economy is projected to grow 1 percent this year and 2.4 per cent in 2022, from an estimated 6.3 per cent contraction in 2020. Saudi Arabia's GDP is set to grow 2 percent this year and 2.2 percent in 2022, after an estimated decline of 5.4 per cent last year.
Kuwait will see a marginal 0.5 percent growth in 2021 from an estimated 8 percent contraction last year.
Activity in the Kingdom will be supported by “a resumption of public capital investment projects postponed during the pandemic and a recovery of demand after the sharp rise of the value added tax.”
Growth in oil importers is expected to rebound to 3.2 percent in 2021 as mobility restrictions are gradually eased and exports and domestic demand recover slowly. In Egypt, growth is expected to slow to 2.7 percent in fiscal year 2020/2021, “amid a collapse in tourism, gas extractives and a slowdown in other key sectors such as manufacturing.”
The World Bank report sees downside risks to the projections from trajectory of the pandemic and its social impacts, downward pressure on oil prices, domestic political uncertainty, and geopolitical tensions.
Oil importers could also be affected by a downturn in oil prices through lower remittances and a decline in foreign direct investment from oil exporting countries in the region.
Output in Middle East and North Africa (MENA) oil exporters is estimated to have contracted by 5.7 percent last year. Oil importers, however, experienced a milder contraction of 2.2 percent in 2020, reflecting an initially limited COVID-19 outbreak in the first half of the year and lower oil prices.
(Reporting by Brinda Darasha; editing by Seban Scaria)
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