ISMR June 2022 - Page 33

REGIONAL REPORT

Image : Shutterstock . com .
“ MENA oil importers are being hit by higher commodity prices and tightening financial conditions , fuelling inflation and worsening external and fiscal accounts . Some countries are also directly exposed , given their heavy reliance on wheat and energy imports from Russia and Ukraine . By contrast , oil and gas exporters ( particularly in MENA ) will benefit from higher energy prices , more than offsetting the impact of tightening financial conditions and lower tourism revenues ,” said the IMF in April 2022 .
“ The recovery in MENA is expected to be uneven . Real GDP growth is forecast at five per cent in 2022 ( a 0.9-percentage-point upgrade
Doha ( Qatar ). Image by Elissa Haidar ( Unsplash ).
Oil exporters face brighter prospects as the windfall from higher oil prices and successful vaccination campaigns are expected to improve fiscal and external balances and support recovery
from October ), down from 5.8 per cent in 2021 . This masks the marked differences across countries : with growth in oil exporters projected at 5.4 per cent , versus 4.4 and 1.1 per cent in EM & MI countries and LICs , respectively . Inflation is projected to remain elevated at 13.9 per cent due to higher food and energy prices and , in some cases , exchange rate depreciation and lax monetary and fiscal policies ,” it added .
Oil exporters face brighter prospects as the windfall from higher oil prices and successful vaccination campaigns are expected to improve fiscal and external balances and support recovery . On average , the IMF projects oil revenues and external current account balances to increase by 5.3 and 7.2 percentage points of GDP , respectively , in 2022 compared to 2021 .
The path to a sustained growth scenario remains fraught with uncertainties , however . Analyst IHS Markit pointed to the volatility of hydrocarbon prices being likely to lead to a reversal of recent oil and gas price trends ; longer-than-expected global supply chain disruptions intensifying upward price pressures ; politico-security tensions and new challenges relating to the latest COVID-19 variant .
Higher oil prices are a double-edged sword for MENA economies . On the one hand , oil-exporting countries see higher oil prices as a boon , feeding state coffers and boosting foreign-currency-earnings generation capacity . This provides them with further resources to spend on economic development and employment creation . On the other hand , oil-importing economies see them as a curse , exacerbating fiscal and external imbalances and causing upward pressures on consumer price inflation .
“ We expect supply bottlenecks in the region to dissipate during 2022 , possibly by the second half of the year , other things being equal . Consequently , we expect the increasing price pressures to last a few more months but ease thereafter , causing yearly average inflation rates to edge up only moderately ,” added IHS Markit in December 2021 .
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