Economic growth in the Mena region is projected to rise to 1.9 per cent in 2019, said the World Bank on Tuesday in its semi-annual Global Economic Prospects report.

Despite slower global trade growth and tighter external financing conditions, domestic factors, particularly policy reforms, are anticipated to bolster growth in the region.

Growth among oil exporters is expected to pick up slightly this year, as GCC countries as a group accelerate to a 2.6 per cent rate from 2 per cent in 2018. Iran is forecast to contract by 3.6 per cent in 2019 as sanctions bite.

Algeria is forecast to ease to 2.3 per cent after a rise in government spending last year tapers off. Egypt is forecast to accelerate to 5.6 per cent growth this fiscal year as investment is supported by reforms that strengthen the business climate and as private consumption picks up.

Global scenario

Global economic growth is projected to soften from a downwardly revised 3 per cent in 2018 to 2.9 per cent in 2019 amid rising downside risks to the outlook, the World Bank said. International trade and manufacturing activity have softened, trade tensions remain elevated, and some large emerging markets have experienced substantial financial market pressures.

Growth among advanced economies is forecast to drop to 2 per cent this year, the January 2019 Global Economic Prospects says. Slowing external demand, rising borrowing costs, and persistent policy uncertainties are expected to weigh on the outlook for emerging market and developing economies. Growth for this group is anticipated to hold steady at a weaker-than-expected 4.2 per cent this year.

“At the beginning of 2018 the global economy was firing on all cylinders, but it lost speed during the year and the ride could get even bumpier in the year ahead”, said World Bank chief executive officer Kristalina Georgieva. “As economic and financial headwinds intensify for emerging and developing countries, the world’s progress in reducing extreme poverty could be jeopardized. To keep the momentum, countries need to invest in people, foster inclusive growth, and build resilient societies.”

The upswing in commodity exporters has stagnated, while activity in commodity importers is decelerating. Per capita growth will be insufficient to narrow the income gap with advanced economies in about 35 per cent of emerging market and developing economies in 2019, with the share increasing to 60 per cent in countries affected by fragility, conflict, and violence.

A number of developments could act as a further brake on activity. A sharper tightening in borrowing costs could depress capital inflows and lead to slower growth in many emerging market and developing economies. Past increases in public and private debt could heighten vulnerability to swings in financing conditions and market sentiment. Intensifying trade tensions could result in weaker global growth and disrupt globally interconnected value chains.

“Robust economic growth is essential to reducing poverty and boosting shared prosperity,” said World Bank Group vice president for Equitable Growth, Finance and Institutions, Ceyla Pazarbasioglu. “As the outlook for the global economy has darkened, strengthening contingency planning, facilitating trade, and improving access to finance will be crucial to navigate current uncertainties and invigorate growth.”

Sub-Sahran Africa

Growth Sub-Saharan Africa is expected to accelerate to 3.4 per cent in 2019, predicated on diminished policy uncertainty and improved investment in large economies together with continued robust growth in non-resource intensive countries.

Growth in Nigeria is expected to rise to 2.2 per cent in 2019, assuming that oil production will recover and a slow improvement in private demand will constrain growth in the non-oil industrial sector.

Angola is forecast to grow 2.9 per cent in 2019 as the oil sector recovers as new oil fields come on stream and as reforms bolster the business environment. South Africa is projected to accelerate modestly to a 1.3 per cent pace, amid constraints on domestic demand and limited government spending. – TradeArabia News Service