IMF slashes Gulf growth forecast

The IMF predicted in February that the region’s economies would grow by 3.5 per cent this year.

Problem countries

Masood Ahmed, director of the IMF’s Middle East and Central Asia department, said: “The region is going to be affected like the rest of the world, but much less so.

“This is mainly because the oil exporters are using their reserves to protect their economies and this is having a spill-over effect on the rest of the region.”

The IMF said that economic growth would drop across the Middle East and Central Asia from six per cent in 2008 to 2.5 per cent this year.

This lower growth rate highlights the problems facing non-oil exporting countries, such as Egypt and Morocco.

Oil prices have dropped to around $50 per barrel from nearly $150 last summer after a six-year rally.

‘Sound institutions’

However, despite Gulf nations’ attempts to diversify away from energy products, they remain susceptible to price volatility in these markets.

Seetharaman Raghavan, the chief executive officer at Doha Bank, told Al Jazeera: “Still it’s a positive growth. It is not contraction like the industrialised world or developing nations.

“We have had three or four years’ boom period – we doubled the GDP (gross domestic product), with per capita [GDP] moving at 18 per cent,” he said.

“[The] countries together producing a very sustainable two per cent growth is still meaningful.”

Raghavan said that stock markets in the region were recovering due to strong fundamentals, although real estate was still a problem sector.