A World Bank’s recently published report on the Middle East and North Africa stated that 2015 economic growth in the region came to only 2.6%, falling short of a 2.8% forecast in October, as war, terrorism, and cheap oil took their toll, Arab Times Online reported.
The plunge in oil prices is causing major problem for the region’s oil exporters, with government revenue dropping and budget deficits increasing. The report explained that Saudi Arabia’s public debt would reach 20% of GDP in 2017, ten times its level of 2.2% in 2013. “The richest oil exporters in the region, Saudi Arabia, Qatar, Kuwait, and United Arab Emirates, have large reserves that will enable them to run deficits over the coming years, although not far beyond that,” the World Bank (WB) clarified. “At current levels of spending, and an oil price of $40 per barrel, Saudi Arabia will exhaust its reserves by the end of the decade.”
The report was issued as the WB is in talks with some oil producers in other regions, including Azerbaijan, Nigeria, and Angola, with regard to financing economies to balance out the negative impact of plummeting oil prices.
The WB also said in the report that to date the Syrian war had inflicted some $35b in lost output on the region, measured in 2007 prices, while the devastating economic impact is still climbing, Middle East Eye added.
The estimates were released on the day when world leaders in London pledged more than $10b in aid to Syrians through 2020. The five-year conflict in the country has cost lives of some 260,000 people and forced 4.6m people to flee, according to UN figures. The World Bank added that “a peace settlement in Syria, Iraq, Libya, and Yemen could lead to a swift rebound in oil output, allowing them to increase fiscal space, improve current account balances, and boost economic growth in the medium term with positive spillovers to the neighboring countries,” reported by Al Bawaba.