IMF cuts global growth forecast and flags Middle East security worries

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Low interest rates and reduced trade tensions will likely buoy the global economy over the next two years and help nurture steady if modest growth, says the International Monetary Fund (IMF). (Screenshot/WEF)
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The International Monetary Fund released its forecast at the outset of the World Economic Forum in Davos, Switzerland, where senior figures from countries likely to most affect the global economic outlook will meet. (AFP)
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Updated 21 January 2020

IMF cuts global growth forecast and flags Middle East security worries

  • International economy is receiving significant boost — 0.5 percentage point of growth last year and this year
  • But IMF warns global economy continues to face array of risks

LONDON: The International Monetary Fund (IMF) lowered its global growth predictions for 2020 despite a slightly improving world economy and warned that geopolitical tensions in the Middle East could impact global oil supplies.

It expects world economic growth to accelerate be 2.9 percent last year, rising to 3.3 percent in 2020 and 3.4 percent in 2021.

The IMF released the figures ahead at the World Economic Forum in Davos, Switzerland.

“Rising geopolitical tensions, notably between the United States and Iran, could disrupt global oil supply, hurt sentiment and weaken already tentative business investment,” the IMF said.

The Middle East and Central Asia is expected to record 2.8 percent growth in 2020, slightly lower than the IMF's October outlook and reflecting a downward revision to Saudi Arabia’s oil output following last month’s decision by the OPEC+ group to extend supply cuts.

It expects the region to pick up speed in 2021 with growth of 3.2 percent.

FASTFACT

2.8% - The IMF expects the Middle East and Central Asia to record 2.8 percent growth in 2020.

IMF chief economist Gita Gopinath said: “We’ve seen clearly a rise in geopolitical tensions in the Middle East. We still have to see how far this goes. If you look at oil prices the reaction has been fairly muted at this point. We’ve seen some increase of about 3 to 4 dollars in the price of oil but nothing very large.”

Regional tensions have escalated sharply after the killing of a top Iranian commander in Baghdad, triggering Iranian retaliatory attacks.

“Prospects for several economies remain subdued owing to rising geopolitical tensions (Iran), social unrest (including in Iraq and Lebanon), and civil strife (Libya, Syria, Yemen),” the IMF said.

Although overall risks to the global economy have reduced over the year, the IMF warned that outcomes “depend to an important extent on avoiding further escalation” between Washington and Beijing.

It also flagged the possibility of new trade tensions emerging between the US and the EU.

“The reality is that global growth remains sluggish,” said IMF Managing Director Kristalina Georgieva. “We are all adjusting to live with the new normal of uncertainty.”


Global trade experts gather in Riyadh as virus crisis heats up

Updated 24 February 2020

Global trade experts gather in Riyadh as virus crisis heats up

  • More than 1,000 international companies set up operations in Saudi Arabia last year

RIYADH: World trade experts are gathering in Riyadh for a major conference as the coronavirus crisis casts a shadow over global commerce.

The Asia House Trade Dialogue takes place on Tuesday in the Saudi Arabian capital, with thought leaders and policymakers taking part in the first such event to be staged in the Kingdom. Around 200 delegates are expected to attend the one-day forum.

Leading thinkers will share their insights on global trade, women’s growing role in business, and the energy industry moving toward renewable technologies. There will also be a live link with a Beijing-based expert on Chinese business to discuss the economic effects of the virus.

Asia House is a London-based consultancy which is headed by the former British trade minister and chairman of the HSBC banking group, Lord Green of Hurstpierpoint. He said: “With Saudi Arabia hosting the G20 this year, we believe it is an important time to bring our trade dialogue to Riyadh to explore the economic shifts taking place in the region and beyond.”

The event is sponsored by the Saudi British Bank, whose chair Lubna Olayan will deliver the keynote speech.

She said: “Trade has historically always been important to the development of the Kingdom, and that is equally true today as the Far East and the Middle East are once again becoming increasingly connected, and we begin a year in which Saudi Arabia leads the G20, with deliberations around trade and investment being a major focus of the B20 (the business arm of G20 summit of world leaders). It is truly an exciting time, so we are pleased to be jointly hosting this important event to explore opportunities for enhancing and facilitating growing trade links between the Far East and the Middle East.”

The conference will be opened by Ibrahim Al-Omar, the governor of the Saudi Arabian General Investment Authority, the body which promotes foreign investment in the Kingdom. Arab News is the strategic media partner for the event.

Lord Green said: “The Middle East remains an extremely important region for global trade, especially as the Gulf broadens its relationships with Asian markets. Just last year, more than 1,000 international companies set up new operations in Saudi Arabia, highlighting business interest in the Kingdom.”

Victor Gao, who is vice president of the Beijing-based Center for China and Globalization, will answer questions via web link about the impact of coronavirus on the Chinese economy.

Saudi Arabia launched its G20 presidency last December with a declaration of its program, which seeks to support innovation, achieve prosperity, empower people and preserve the planet, in line with the Kingdom’s Vision 2030 reform plan.

King Salman hailed the G20 presidency as proof of the country’s key role in the global economy.