The International Monetary Fund has lowered its forecast of real GDP in 2020 for most Gulf countries, warning that the economic outlook is getting worse for many emerging markets amid the Corona crisis.
In its latest report on the global economic outlook, the IMF predicted on Tuesday a global contraction of 4.4 percent in 2020, up from the 5.2 percent contraction expected in June, but said it was still the worst economic crisis since the Great Depression of the 1930s.
The oil-rich Gulf states are experiencing the double shock of the Coronavirus crisis that is dampening demand in the non-oil economy, and lower oil prices, which hurt revenues this year.
The International Monetary Fund revised its previous forecasts for all Gulf countries with the exception of Saudi Arabia, which is expected to witness a contraction of 5.4 percent this year, compared to previous estimates of 6.8 percent.
The fund said the UAE, the second-largest economy in the Gulf, could see a 6.6 percent contraction this year, against previous expectations of a 3.5 percent decline.
The biggest change came in the forecast for the Sultanate of Oman, which is expected to witness a contraction of 10 percent, and Kuwait at 8.1 percent. In April, the fund had forecast a contraction of 2.8 percent in Oman and 1.1 percent in Kuwait.
The fund said Qatar’s economy is expected to contract by 4.5 percent and Bahrain’s economy by 4.9 percent, against expectations of a decline in April of 4.3 percent and 3.6 percent, respectively.
The International Monetary Fund estimates that all Gulf economies, with the exception of Oman, are expected to return to growth next year, led by Saudi Arabia, whose GDP will grow 3.1 percent in 2021.
The economic recovery in the UAE is expected to be slower, at 1.3 percent, next year, while Oman is expected to remain hostage to a slowdown with a 0.5 percent contraction.
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