Gulf countries shine amid IMF downgrades

Global economic growth is slowing, but Gulf countries won’t be the drag. The International Monetary Fund slashed its forecast for growth in the Middle East and North Africa this year to 2.6%, down from 4% in October, citing weaker global demand, lower oil prices, and continued production cuts by OPEC+ (which are being phased out).

But the region is split: Gulf countries are faring better thanks to sustained government investment and fiscal buffers, while non-Gulf oil exporters are constrained by sanctions, debt, and lower revenues, Jihad Azour, director of the IMF’s Middle East and Central Asia Department, said at a briefing in Dubai.

Saudi Arabia, with its low debt and ample reserves, is relatively insulated from the global trade war. But every $10 drop in oil prices has a large effect on its budget, cutting its fiscal balance by 2.25% of GDP, Azour said. Gulf countries with smaller buffers, like Bahrain, are under pressure to consolidate spending.