IMF foresees global economy accelerating to 3.5% in 2017

International Monetary Fund Managing Director Christine Lagarde (L) and World Bank President Jim Yong Kim (R) share a stage at the Parliamentary Town Hall at the IMF/World Bank Spring Meetings at the World Bank on Monday in Washington, DC. (AFP)
Updated 18 April 2017
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IMF foresees global economy accelerating to 3.5% in 2017

WASHINGTON: A resilient China, rising commodity prices and sturdy financial markets are offering a sunnier outlook for the global economy and helping dispel the gloom that has lingered since the Great Recession ended.
That is the picture sketched Tuesday by the International Monetary Fund (IMF), which predicts that the world economy will grow 3.5 percent this year, up from 3.1 percent in 2016. The IMF’s latest outlook for 2017 is a slight upgrade from the 3.4 percent global growth it had forecast in January.
The IMF expects the US economy to grow 2.3 percent, up from 1.6 percent in 2016; the 19-country euro zone to expand 1.7 percent, the same as last year; Japan to grow 1.2 percent, up from 1 percent; and China to expand 6.6 percent, down from 6.7 percent in 2016.
Economic growth in most Arab oil exporters will slow this year following production cuts aimed at propping up energy prices, the IMF said.
In its latest World Economic Outlook report, the IMF cut its 2017 growth forecast for the region comprising the Middle East, North Africa, Afghanistan and Pakistan to 2.6 percent, down from the 3.1 percent projected in January.
“The subdued pace of expansion reflects lower headline growth in the region’s oil exporters, driven by the November 2016 Organization of the Petroleum Exporting Countries (OPEC) agreement to cut oil production,” the Washington-based IMF said.
It “masks the expected pickup in non-oil growth as the pace of fiscal adjustment to structurally lower oil revenues slows,” the IMF added, referring to measures to cut budget deficits.
Members of OPEC, mostly from the region, agreed last year to reduce output by 1.2 million barrels per day (bpd) from Jan. 1 for six months, to support crude prices that had shed half of their value since mid-2014.
One bright spot is gas-rich Qatar, which is expected to register 3.4-percent growth this year, compared with 2.7 percent in 2016. Kuwait’s economy, in contrast, is forecast to shrink by 0.2 percent.
In Algeria, the IMF sees economic growth of 1.4 percent this year, down from 4.2 percent last year. Growth is also predicted to slow sharply in Iran, to 3.3 percent in 2017, from 6.5 percent last year when it won a boost from the lifting of economic sanctions.
Iraq’s economy is expected to contract by 3.1 percent in 2017 after surging by 10.1 percent last year on the back of expanding oil exports after sharp contractions in the previous two years.
The overall figure for the region overshadows a faster pace in many of its oil-importing countries.
Morocco’s economic growth is forecast to jump from 1.5 percent last year to 4.4 percent this year, while Tunisia’s economy is seen expanding by 2.5 percent compared with just one percent the year before.
On the other hand, Egypt will see slower growth of 3.5 percent this year, compared with 4.3 percent last year.
The IMF, whose forecasts exclude war-torn Syria, noted: “Continued strife and conflict in many countries in the region also detract from economic activity.”
Meanwhile, a “broad-based recovery is expected to continue at a healthy pace” in Pakistan, the IMF said, forecasting growth of 5 percent this year, and 5.2 percent in 2018, “supported by ramped-up infrastructure investment.”


Iraq’s move to rush oil bidding could deter some major companies

Updated 1 min 41 sec ago
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Iraq’s move to rush oil bidding could deter some major companies

  • Last month, Oil Minister Jabar Ali Al-Luaibi unexpectedly moved the date to receive bids from late June to April
  • Fourteen companies are qualified to bid for exploration and development rights for 11 underdeveloped blocks
BAGHDAD: Iraq is opening more of its untapped oil and gas resources to foreign developers, hoping to boost revenues after its costly war with the Daesh group, but analysts say the rushed bidding process — now timed to precede national elections — could draw a lukewarm response.
Last month, Oil Minister Jabar Ali Al-Luaibi unexpectedly moved the date to receive bids from late June to April, meaning the bidding would be held before May 12 national elections. Some believe Al-Luaibi, who is campaigning for a seat in parliament, moved up the date for political reasons.
Al-Luaibi hopes to represent the oil-rich southern province of Basra as a member of the Victory Alliance, which is led by Prime Minister Haider Al-Abadi, who is running for re-election.
“Personal and partisan interests are taking priority over national interests,” said Ruba Husari, managing director of the consulting firm Iraq Insight. “The objective of the exercise is aimed doubtlessly at portraying the ministry — and the minister — as aggressive in developing the nation’s resources ahead of the (elections).”
The Associated Press placed multiple calls to Al-Luaibi’s spokesman, who did not pick up. An aide to the spokesman said Al-Luaibi’s office was too busy with the election campaign to comment on the allegations.
In one of his campaign videos, Al-Luaibi tries to reassure a group of weary Iraqis who are worried about their future.
“Past years have wreaked havoc on everything,” a man in traditional Arab clothing says in the video, referring to the devastation caused by war. “Iraq’s wealth is your responsibility,” says a woman dressed in a conservative abaya — a loose black cloak that covers the body from shoulders to feet.
“I’m confident that with your determination I can protect the wealth of the generations,” Al-Luaibi says at the end of the video.
Thursday’s auction will be the fifth since Iraq opened its vast oil and gas reserves to international energy companies in 2009 for the first time in decades.
In previous bidding rounds, officials spent months hosting conferences, road shows and discussions with companies before issuing final contracts. Last month, the minister changed the date to April 15, but when companies asked for more time it was extended to Wednesday, and then to Thursday.
Ian Thom, principal analyst at energy consultancy Wood Mackenzie, said the tighter deadline could work against Iraq.
“Companies may be more cautious if they have not fully evaluated the bid terms,” he said. “This may result in bids being less competitive as companies seek a greater margin of safety.”
Fourteen companies are qualified to bid for exploration and development rights for 11 underdeveloped blocks.
Seven are located near the border with Iran, and three others are located near the Kuwaiti border, while the 11th is in the Arabian Gulf, in Iraqi territorial waters.
Encouraged by an improved security situation, Iraq in 2009 began to attract international oil companies to develop its vast untapped oil and gas reserves. Top among major oil companies are the US’s Exxon Mobil, Royal Dutch Shell, the UK’s BP, China’s CNPC and Russia’s Lukoil.
Since then, Iraq has awarded a handful of oil deals to develop major fields that hold more than half of its 153.1 billion barrels of proven oil reserves. Deals to tap natural gas resources were also awarded. As a result, Iraq’s daily production and exports have jumped to levels not seen since the late 1970s and early 1980s.
The country is now producing around 4.36 million barrels a day from Baghdad-controlled oil fields, up from nearly 2.4 million a day in 2009, and its daily exports averaged 3.450 million barrels a day last month, making it OPEC’s second-largest producer behind Saudi Arabia. Oil revenues make up nearly 95 percent of the country’s budget.
An economic crisis set in over the course of 2014, when the Daesh group swept across much of northern and western Iraq and oil prices plummeted. Iraqi forces concluded major military operations against the extremists last year, but large parts of the country were reduced to rubble.
In February, Iraq secured $30 billion from international donors to help rebuild devastated areas, far from the $88.2 billion Baghdad estimates it needs.
Earlier this month, the Iraqi Cabinet approved a five-year development plan with a target of 6.5 million barrels a day by 2022.
Iraq’s 2018 budget of nearly $88 billion comes with a deficit of more than $10 billion. It is based on a projected oil price of $46 per barrel and a daily export capacity of 3.8 million barrels.