Middle East sees strong growth amid record oil prices

April 10th, 2008 - 2:26 am ICT by admin  

Washington, April 10 (DPA) Middle Eastern economies are growing stronger despite a global economic slowdown, thanks in large part to surging oil prices that are helping boost exports, the International Monetary Fund (IMF) said Wednesday. The Middle East is forecast to grow an average of 6.1 percent in both 2008 and 2009, up from 5.8 percent in the previous two years, according to the IMF’s semi-annual World Economic Outlook report.

Egypt, though not an oil-producing country, leads the region with growth rates that are forecast to hold roughly steady at seven percent this year and 7.1 percent in 2009.

Crude oil prices passed $112 per barrel in New York trading Wednesday. The Middle East’s 10 oil exporters will grow a combined six percent in 2008, up from 5.6 percent a year earlier, the IMF said.

But the IMF warned that higher food prices, rents due to housing shortages, and strong domestic demand have all considerably boosted inflationary pressures in the last few months. Consumer prices were forecast to rise 11.5 percent across the region over 2008, led by an expected 20.7-per-cent price hike in Iran.

Dampening inflation was the “key macroeconomic policy challenge” for the region, the IMF said.

Middle Eastern countries have used the higher oil revenue to boost government spending on infrastructure and social projects, the IMF said.

Governments have also expanded credit opportunities to the private sector, and the IMF encouraged a stronger build-up of private rather than state-owned firms across the region.

The region could yet be affected by the global economic slowdown if it leads to a significant drop in oil prices, the IMF said.

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