Today's Edition
KHALED AL KHAWALDEH (DUBAI)
The Director of the Middle East and Central Asia Department of the International Monetary Fund (IMF), presented a cautious yet optimistic economic outlook for the region, but warned against high debt levels and geopolitical risks.
Speaking on the second day of the World Governments Summit in Dubai on Wednesday, Jihad Azour, said the IMF had observed a shift in oil-based GCC economies towards a more diverse energy mix and investments in key sectors that would be crucial for growth.
"I think the size of the oil economy is still larger in terms of influence, However, if we look at recent trends, we see clearly a growing dimension of the number of sectors where the share of non-oil GDP is growing and constantly expanding into new sectors," he said.
"Now there are opportunities to into specific areas, including technology-driven ones, as well as fostering additional trade integration among GCC countries, on the one hand, and other parts of the world in Africa or Central Asia, on the other."
Azour also highlighted the increasingly resilient oil market, which had shown less susceptibility to geopolitical events. He said this bolstered confidence in GCC economies, which had been able to continue growing despite several massive global shocks in the last few years.
"We are seeing a greater resilience to the shocks the world has witnessed over the last four or five years, several shocks like the war in Ukraine, COVID-19 and the regional tension here since 2023, yet we saw only some short term volatility," he explained.
"I think this is one element that is showing that we are moving from traditional oil and gas sector to a broader energy sector, and we are moving from only supplying oil or gas or energy to supplying services and those that are energy intensive."
Focusing on other parts of the region, Azour said the cessation of hostilities and the return to stability would be paramount in improving the economic outlook. He noted there were opportunities for countries like Egypt and Morocco to become more central players in the global economy, but warned this would require a substantial reduction in overriding debt levels.
"I take the example of Morocco, I take the example of Egypt, who are part of the global value chains, which have the opportunity today to increase their capacity to pay a role of a larger economic centre," he said.
"Therefore, yes, there are opportunities, but also, I think we need to be mindful of two things. There are important challenges. And the first one is that several countries have highlighted, in a moment where global macro conditions are showing, that interest rates are high. Therefore, countries will have high levels of debt. They need to address this issue decisively."
