Dubai — The economy of the six-member Gulf Cooperation Council will shrink 7.6% in 2020, worse than April projections, due to weak oil prices and the coronavirus outbreak, an International Monetary Fund official said on June 30.
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The Gulf regions' GDP was initially forecast to contract 2.7%, according to the IMF's April projections. The GCC countries are Saudi Arabia, Kuwait, the UAE, Oman, Qatar and Bahrain. Growth is expected to return next year at a 2.5% pace, which will be among the highest economic recoveries the region will witness, Jihad Azour, the IMF's director for the Middle East and Central Asia department, told a webinar organized by the IMF and conference organizer al-Iktissad Wal-Aamal group.
"We expect a V-shaped recovery for the Gulf region," Azour said. "This is linked to the recovery in oil prices." Brent crude was down 1.9% in recent trading at $40.92/b.
The IMF in June lowered its projection for 2020 world growth to a 4.9% contraction, 1.9 percentage points below its April forecast because the coronavirus pandemic had a worse impact on the global economy in the first half.
In 2021, the global economy will recover and grow 5.4%, 0.4 percentage point lower than the April forecast, according to the IMF. The fund in June kept its average petroleum spot price estimates at $36.20 for 2020 and $37.50 for 2021.
Saudi Arabia, the world's biggest oil exporter and the Arab world's biggest economy, will see its economy shrink 6.8% in 2020, according to the IMF's June forecast, compared with 2.3% contraction in the April projection.
Saudi Arabia believes the IMF's forecasts for a deep recession are too pessimistic, Ahmed AlKholifey, governor of the Saudi Arabian Monetary Authority, told the webinar, without providing the authority's projection. The authority is the kingdom's central bank.
Saudi Arabia's economy shrank 1% in the first quarter and the second quarter will not be any better, although the agency expects a recession for the year, he said.