1. QNB Economics
economics@qnb.com.qa
27 April 2013
IMF Outlook may be Optimistic and MENA Growth Bucks Global Trends
The IMF has released its latest edition of the
World Economic Outlook (WEO) and has revised
down its projections for 2013 global growth by
0.2% points to 3.3%, yet again pushing back the
expected recovery. The IMF’s forecasts for 2013
growth were revised down in each of its last three
quarterly updates to the WEO, from a peak
forecast of 4.1% made a year ago. The IMF now
does not expect the global economy to achieve
4% growth until 2014.
However, according to QNB Group, with growth in
the world’s largest economies slowing, the IMF
outlook for 2013-14 may be too optimistic and the
trend of downward revisions to forecasts is likely
to continue. The Eurozone continues to languish in
recession with growth contracting at an annualised
rate of 0.6% in Q4 2012 and expected to contract
at the same rate in Q1 2013. Growth in China has
been slowing consistently and Q1 2013 year-on-
year growth of 7.7% disappointed as it was below
expectations of 8.0%. After weak annualised
growth of 0.4% in Q4 2012, the US recovered in
Q1 2013 to 3.0%, driven by stronger consumer
spending. The US is a prime candidate for driving
acceleration in global growth in 2013-14. However,
the outlook remains unclear. The strong Q1
growth figures may just be a bounce back from a
weak Q4 2012 and quarterly growth figures have
been volatile in recent years.
12
2
10
8
4
0
-2
China
(yr-on-yr)
US
(annualised)
Eurozone
(annualised)
Q1
13
7.7
3.0*
-0.6*
Q3
12
Q1
12
Q3
11
Q1
11
Q3
10
Q1
10
Real GDP, Major World Economies
(% change)
Source: Bloomberg, *consensus estimates for Q1 2013
The IMF expects the US economy to expand by
1.9% in 2013 and 3.0% in 2014 and the Eurozone
to recover from a 0.3% contraction in 2013 to
growth of 1.1% in 2014. As a result, Advanced
Economies are expected to deliver overall growth
of 1.2% in 2013 and 2.2% in 2014.
The outlook for Emerging Markets and Developing
Economies is positive with a gradual pickup in
growth from 5.1% in 2012 to 5.3% in 2013 and
5.7% in 2014. China and India are expected to
drive this acceleration. India is expected to pick up
from 4.0% in 2012 to 5.7% in 2013 and 6.2% in
2014 while China is expected to accelerate from
7.8% in 2012 to 8.0% and 8.2%. However, the
outlook for China may need to be given its
disappointing Q1 2013 GDP. Recent data has
heightened concerns about the downside risks to
China growth, mainly related to the banking
sector, which has high levels of non-performing
loans and is over-exposed to the indebted real
estate sector.
In 2012, nearly every region covered by the WEO
experienced a slowdown in growth. The only
regions with accelerating growth were MENA and
the “ASEAN-5” (Indonesia, Malaysia, Philippines,
Thailand and Vietnam). MENA accelerated from
4.0% in 2011 to 4.8% in 2012, despite political
transitions in a number of countries. Meanwhile,

2. QNB Economics
economics@qnb.com.qa
27 April 2013
ASEAN-5 growth accelerated from 4.5% to 6.1%.
However, the IMF expects growth to decelerate in
2013 in both regions, dropping to 3.1% in MENA
and 5.9% in the ASEAN-5.
Within MENA, growth in oil exporting countries has
been stronger than in oil importers. However,
hydrocarbon production is likely to level off in
2013, putting a cap on regional growth. Saudi
Arabian crude oil production averaged 9.5m
barrels per day in February 2013, down from its
highs of over 10m in 2012 when production was
ramped up to ensure oil markets remained well
supplied. The completion of the current phase of
Qatar’s LNG expansion programme is another
important factor in the levelling off in growth in
MENA oil and gas exporters.
Despite the regional instability caused by the
ongoing crisis in Syria, oil importers are bouncing
back slightly from the negative impact on growth of
their political transitions. Growth in this group of
countries picked up from 1.4% in 2011 to 1.9% in
2012 and is expected to rise further, although
there remains considerable downside risks
associated with the uncertainties of political
transition. Growth may be being helped by some
positive indicators such as a recovery in tourism
Tunisia and better-than-expected agricultural
harvests in Sudan.
4.5
4.8
3.1
5.9
4.0
6.1
2014f
World
ASEAN-5
MENA
2011 2012
3.7
5.5
2013f
Real GDP, Selected Regions
(% change)
Source: IMF
Therefore, the difference between growth rates of
oil exporters and importers is likely to narrow in
2013-14. MENA oil exporters are expected to grow
by 3.2% in 2013 and 3.7% in 2014 while oil
importers are expected to grow by 2.7% and 3.7%.
This convergence will be encouraged by the
expected downward trend in oil prices, which the
IMF expect to be 2.3% lower in 2013 and a further
4.9% lower in 2014, on average. This would lower
revenue for oil exporters, dampening economic
performance, while it should reduce import costs
for net importers, providing an economic boost.
** Ends **