World Bulletin / News Desk
Economic growth in Saudi Arabia and most other Arab oil exporters will slow this year following production cuts aimed at propping up energy prices, the International Monetary Fund said Tuesday.
"The subdued pace of expansion reflects lower headline growth in the region's oil exporters, driven by the November 2016 OPEC agreement to cut oil production," the Washington-based IMF said.
It "masks the expected pickup in non-oil growth as the pace of fiscal adjustment to structurally lower oil revenues slows," the IMF added, referring to measures to cut budget deficits.
Members of the OPEC cartel of oil exporters, mostly from the region, agreed last year to reduce output by 1.2 million barrels per day from January 1 for six months, to support crude prices that had shed half of their value since mid-2014.
"Growth in Saudi Arabia, the region's largest economy, is expected to slow to 0.4 percent in 2017 because of lower oil production and ongoing fiscal consolidation, before picking up to 1.3 percent in 2018," the IMF said.
It said that growth is likely to dip in most Gulf Cooperation Council member states, which also include Bahrain, Kuwait, Oman, Qatar and the United Arab Emirates.
One bright spot is gas-rich Qatar which is expected to register 3.4-percent growth this year, compared with 2.7 percent in 2016. Kuwait's economy, in contrast, is forecast to shrink by 0.2 percent.
In Algeria, the IMF sees economic growth of 1.4 percent this year, down from 4.2 percent last year.
Growth is also predicted to slow sharply in Iran, to 3.3 percent in 2017, from 6.5 percent last year when the Islamic republic won a boost from the lifting of economic sanctions.
Iraq's economy is expected to contract by 3.1 percent in 2017 after surging by 10.1 percent last year on the back of expanding oil exports after sharp contractions in the previous two years.
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Volatility eased as traders focused on the world economy and corporate earnings after a week dominated by the dramatic spike in tensions over North Korea, which triggered a global sell-off before prices bounced back Monday.
Investors greeted the more conciliatory tone after US stocks dropped three days in a row last week on President Donald Trump's vow of "fire and fury" if North Korea continued to pursue its nuclear weapons and ballistic missile programs.
The ultra-conservative kingdom has moved to diversify its traditionally oil-dependent economy following a sharp fall in crude prices.
In its monthly report on the global oil market, the International Energy Agency said, however, that it believes the supply glut is easing, partly because demand is growing faster.
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