IMF: Diversified Gulf Economy Improves Financial Balance

IMF: Diversified Gulf Economy Improves Financial Balance

Gulf Arab oil exporters are expected, on average, to put away about 33 percent of their oil revenues over 2022-26, which will lead to an overall improvement in the financial balance, according to the International Monetary Fund (IMF).

The IMF said in its latest report that higher oil and gas prices are expected to increase the average current account surplus in the six states Gulf Cooperation Council (GCC) to 9.7 percent of GDP in 2022, up from 4.6 percent of GDP last year, leading to an additional surplus of $275 billion.

"Many (Gulf states) confirm that this time they will stick to their (fiscal discipline) plans...The proof is going to be in the pudding. Always you have temptations to go pro-cyclical," IMF Middle East and Central Asia department director Jihad Azour told Reuters.

"Oil exporters must increase and strengthen their buffers and use this moment as a litmus test for sustainable diversification."

Middle East oil exporters are expected to outperform peers, with projected growth at 5.2 percent this year following 4.5 percent growth in 2021, boosted by high oil prices and robust non-oil GDP growth offsetting rising global interest rates and high food prices.

The Fund's report indicated that growth is expected to moderate to