- DUBAI: The Mideast's economy is recovering from the global economic downturn at a healthy pace, helped along by higher oil prices and lavish spending by the region's richer governments, the International Monetary Fund said Wednesday.
Those gains are expected despite lingering concerns about further fallout from Dubai's credit crisis, which has sent financial tremors across the region and raised questions about sovereign debt in much of the Arab world.
The IMF's latest forecast calls for economic output in the Mideast and North Africa region, or MENA, to grow as a whole by 4.5 percent this year and 4.8 percent in 2011. The estimates are largely in line with previous forecasts.
"The MENA region is growing out of its downturn at a good speed," the IMF said in its latest World Economic Outlook.
The IMF estimated that economic growth in the Sub-Saharan Africa would reach 4.7 percent this year and 5.9 percent next year.
That would mark a sharp rebound from the 2.1-percent growth the region achieved in 2009 when impoverished sub-Saharan African countries escaped the dire recession that ravaged rich-world economies.
"The region's quick recovery reflects the relatively limited integration of most low-income economies into the global economy," the IMF said.
It projected that Africa's low-income economies as a group would see growth speed up from 4.3 percent in 2009 to 4.7 percent this year and 6.7 percent next year.
In sharp contrast past downturns, government spending to offset the impact of weaker economic activity was a positive development during the recent crisis.
The IMF cited increased exports fueled by higher commodity prices and the "key role" played by government spending programs in rich OPEC member states such as Saudi Arabia and Qatar, which are pumping billions of dollars into infrastructure projects at home.
"In the group of oil exporters, the strongest performer is Qatar, where real activity is projected to expand by 18.5 percent in 2010, underpinned by continued expansion in natural gas production and large investment expenditures," the IMF said.
GDP in Saudi Arabia and Kuwait is expected to grow at about 3.75 percent and 3.0 percent respectively in 2010.
But growth in the United Arab Emirates is projected to be subdued at 1.25 percent due to Dubai's debt crisis, the economic impact of which, the IMF said, "has so far been relatively limited but whose full impact may not be felt for some time."
In the group of oil importers, Egypt's GDP is projected to grow 5.0 percent in 2010 and 5.5 percent in 2011, "helped by stimulative fiscal and monetary policies."
For Morocco and Tunisia, the rate of growth is projected at between 3.25 percent and 4.0 percent in 2010, and 4.5 to 5.0 percent in 2011, "assuming exports, tourism, remittances and foreign direct investment continue to improve."
The IMF flagged a number of causes for concern, however.
It said financial sectors and property markets remain vulnerable in some rich Arab countries, including Kuwait and the United Arab Emirates, a seven-state federation of which Dubai is a part.
Meanwhile, sluggish growth in Europe is hampering a recovery in exports, worker remittances and tourism in other countries without major oil reserves, such as Morocco and Tunisia, which rely heavily on neighbors across the Mediterranean.
The IMF cautioned that "substantial uncertainty" to its forecast remains.
One of its main concerns is an extended hangover from Dubai's debt problems. The Gulf emirate shocked global markets late last year by seeking new terms on repaying $26 billion in debt for its Dubai World conglomerate - only a fraction of what the city-state and its many government-run companies owe. The company is still in talks with creditors.
The IMF said that while the economic aftermath of the Dubai World crisis has been relatively limited so far, the full effects on government debt in the region might not be felt for "some time." That, in turn, "could have a lasting effect on financial systems, corporate sectors, and, more generally, economic activity in the area," the IMF warned.

