Soaring prices great news for oil-producing nations
Special to World Tribune.com
MIDDLE EAST NEWSLINE
Wednesday, September 20, 2000
LONDON — Soaring oil prices have led to a strong comeback for
oil-producing countries in the Middle East.
But the International Monetary Fund said that non-oil producing
countries in the Middle East could see a reduction in their growth as their
fuel bill grows higher. The organization predicts higher oil prices in the
coming months.
"In the Middle East, economic growth among the Gulf oil exporters is
projected to turn positive in 2000 and remain so in 2001," the IMF said in
its semi-annual World Economic Outlook report. "Despite the improvement in
growth prospects as well as external and fiscal balances many of these
countries are pressing ahead, albeit sometimes slowly, with structural
reforms to boost the non-oil private sector that was initiated when much
lower oil prices threatened macroeconomic stability."
The IMF report cited Saudi Arabia, which is restructuring its
telecommunications and utility sectors; Kuwait, which has encouraged the
growth of its private sector; Algeria, which has expanded private industry
and instituted reforms. In contrast, Iran's reform plans have been
implemented too slowly to fully benefit from higher oil prices.
The fund predicted a 47.5 percent increase in oil prices by the end of
2000 as compared to the previous year. In 2001, prices would decrease by
13.3 percent.
"There may still be upside risks to prices in coming months," IMF
research director Michael Mussa said.
Non-oil countries have a less bright future. The IMF said an increase
of $5 a barrel will result in a .2 percent drop in the gross domestic
product of consumer nations. The increase in oil prices would also cause
higher inflation and interest rates.
The IMF said Egypt's annual output growth is expected to slow down this
year while inflation will remain at about three percent. The regime of
President Hosni Mubarak must continue what the IMI termed its tight monetary
and fiscal policies.
The IMF forecasts modest economic recovery in Israel. The organization
said private domestic demand is expected to grow because of improved
confidence and lower interest rates.
Wednesday, September 20, 2000
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