The slump in oil prices and ongoing conflicts continue to weigh on MENAP’s (Middle East, North Africa, Afghanistan and Pakistan) economic outlook, the International Monetary Fund (IMF) said in its Regional Economic Outlook.
Uncertainties arising from conflicts in Iraq, Libya, Syria, and Yemen are weakening confidence and lower oil prices are taking a toll on exports and economic activity in oil exporters, said the report. IMF analysts said that oil importers are benefiting from lower oil prices, although declining remittances from oil exporters are partly offsetting these benefits.
Despite recent increases, oil prices are projected to remain low over the coming years, according to the report.
“Over the medium term, any further oil price recovery is expected to be limited, with futures markets suggesting prices will remain below $60 by 2021,” said IMF.
The oil market outlook has not fundamentally changed since the April 2016, the IMF analysts said, adding that oil prices are assumed to average $43 a barrel in 2016 and $51 a barrel in 2017.
“However, considerable uncertainty surrounds the oil price outlook on both the downside and upside, resulting from the global growth risks, sharp swings in the amount of oil supply outages, and ongoing consolidation and efficiency gains in the US shale oil industry,” said the report.