The GCC economies have been amongst the best performing in the world in recent years, and are expected to grow 4.5 per cent in 2014-15, said Christine Lagarde, managing director of the International Monetary Fund (IMF).

“Particularly, growth in the non-oil sector is expected to remain strong at about 6 per cent, driven by large investments in infrastructure and private sector confidence,” Lagarde added in a statement issued at the conclusion of a recent meeting in Kuwait with the finance ministers and central bank governors of the GCC and the inauguration of the IMF-Middle East Center for Economics and Finance.

“Oil prices have fallen by about 25 per cent since the summer, and this will affect fiscal and external balances in the region. While the substantial fiscal buffers that have been built-up in most countries over the past decade will allow governments to maintain spending plans in the near-term, in almost all GCC countries it increases the urgency for fiscal consolidation in the medium-term,” she elaborated.

“There is scope to strengthen policy frameworks in the GCC to support economic management. On the fiscal side, this could involve reforms to the annual budget process and the introduction of a medium-term budget framework. Regarding macroprudential policies, the introduction of a formal macroprudential policy framework would clarify responsibilities and coordination among regulators,” she said.

“The future success of the GCC economies will be closely tied to ongoing efforts to boost the employment of nationals in the private sector and to increase economic diversification. Many policies are being implemented to achieve these objectives, and important progress is being made.

“Nevertheless, getting the economic incentives right so as to encourage workers to seek employment in the private sector and firms to produce in exported-oriented sectors is a key missing element of policies to date,” the IMF managing director said in the statement.

She also said that the IMF-Middle East Center for Economics and Finance is well-established as a premier location for economics training for government officials and has now provided training to more than 3,600 officials from the 22 countries of the Arab League. – TradeArabia News Service