IMF: Diversified Gulf Economy Improves Financial Balance

IMF Middle East and Central Asia department director Jihad Azour. (Reuters)
IMF Middle East and Central Asia department director Jihad Azour. (Reuters)
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IMF: Diversified Gulf Economy Improves Financial Balance

IMF Middle East and Central Asia department director Jihad Azour. (Reuters)
IMF Middle East and Central Asia department director Jihad Azour. (Reuters)

Gulf Arab oil exporters are expected, on average, to put away about 33 percent of their oil revenues over 2022-26, which will lead to an overall improvement in the financial balance, according to the International Monetary Fund (IMF).

The IMF said in its latest report that higher oil and gas prices are expected to increase the average current account surplus in the six states Gulf Cooperation Council (GCC) to 9.7 percent of GDP in 2022, up from 4.6 percent of GDP last year, leading to an additional surplus of $275 billion.

"Many (Gulf states) confirm that this time they will stick to their (fiscal discipline) plans...The proof is going to be in the pudding. Always you have temptations to go pro-cyclical," IMF Middle East and Central Asia department director Jihad Azour told Reuters.

"Oil exporters must increase and strengthen their buffers and use this moment as a litmus test for sustainable diversification."

Middle East oil exporters are expected to outperform peers, with projected growth at 5.2 percent this year following 4.5 percent growth in 2021, boosted by high oil prices and robust non-oil GDP growth offsetting rising global interest rates and high food prices.

The Fund's report indicated that growth is expected to moderate to 3.5 percent in 2023 as oil prices decline and global demand slows.

The Fund expects Saudi Arabia to achieve 7.6 percent growth this year, slightly less than the government's eight percent forecast and up from 3.2 percent in 2021.

The Kingdom's oil sector growth was seen falling to 3.3 percent next year, from 13.1 percent in 2022, while non-oil GDP is forecast at 3.8 percent in 2023 versus 4.2 percent this year.

"Our policy recommendations for Saudi as well as for other oil exporting countries is to keep the path of reforms that helps diversify the economy, improve productivity (and) avoid pro-cyclical policies," Azour said.

He added that the non-oil sector is growing in Saudi Arabia, the UAE, and other Gulf countries, with new sectors opening and attracting investment, while the financial sector is "well-capitalized, profitable, and strong."

Azour urged increased efforts to diversify economic activities and legislative reforms to increase productivity and enhance infrastructure to support private sector growth.

More broadly, the Fund said that economic activity in the Middle East and Central Asia was resilient, with recovery continuing in 2022. However, the region must guard against growing global headwinds and push ahead with reforms.

While crude exporters benefit from an oil windfall projected to accrue a cumulative $1 trillion over 2022-2026, emerging market and middle-income states face deep terms-of-trade shock and curtailed access to market financing.

Azour said ahead of the October report that countries should be on alert as "headwinds are growing, vulnerabilities are growing" with a global economic slowdown, volatile food, and energy prices, and tightening financial conditions.

He said the region needed to "act now, act fast and act in a comprehensive way" on structural reforms and that oil exporters should use this opportunity to strengthen their buffers.

An urgent policy challenge was tackling the cost-of-living crisis by restoring price stability, protecting vulnerable groups through targeted support, and ensuring food security.

The report said "higher food prices and more pervasive food and energy shortages could lead to food insecurity and social unrest, particularly in 2023," warning of broad-based inflation.

In the Middle East and North Africa, GDP was forecast to grow five percent this year, up from 4.1 percent in 2021 and then expected to slow to 3.6 percent in 2023 due to worsening global conditions. Inflation was put at 12.1 percent in 2022 and 11.2 percent next year.

Higher interest payments and increased reliance on short-term financing in some emerging markets and middle-income countries such as Egypt, Pakistan, and Tunisia were expected to raise gross public financing to $550 billion over 2022-23, which is $22 billion above the earlier period.



Iraq Oil Output Exceeds 5 million bpd

Majnoon oil field near the Iraqi city of Basra (Reuters)
Majnoon oil field near the Iraqi city of Basra (Reuters)
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Iraq Oil Output Exceeds 5 million bpd

Majnoon oil field near the Iraqi city of Basra (Reuters)
Majnoon oil field near the Iraqi city of Basra (Reuters)

Iraq produces more than 5 million barrels of oil per day (bpd), Oil Minister Basim Mohammed told state news agency INA on Saturday.

According to Reuters, Iraq is pushing for a higher OPEC production quota as the economic fallout from the Iran war and new investment by oil majors increase pressure on Baghdad to boost output, potentially putting it at odds with the producer group.

The conflict has hit Iraq particularly hard, forcing major export cuts and depriving the state of oil revenue, which accounted for 88% of government income last year.


IMF: Any Slowdown in AI-driven Growth Would be Factor for Central Banks

IMF Managing Director Kristalina Georgieva speaks during the Annual Meetings Plenary at the Annual Meetings of the International Monetary Fund (IMF) and the World Bank Group (WBG) at the Queen Sirikit National Convention Center (QSNCC) in Bangkok on October 16, 2026. (Photo by Lillian SUWANRUMPHA / AFP)
IMF Managing Director Kristalina Georgieva speaks during the Annual Meetings Plenary at the Annual Meetings of the International Monetary Fund (IMF) and the World Bank Group (WBG) at the Queen Sirikit National Convention Center (QSNCC) in Bangkok on October 16, 2026. (Photo by Lillian SUWANRUMPHA / AFP)
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IMF: Any Slowdown in AI-driven Growth Would be Factor for Central Banks

IMF Managing Director Kristalina Georgieva speaks during the Annual Meetings Plenary at the Annual Meetings of the International Monetary Fund (IMF) and the World Bank Group (WBG) at the Queen Sirikit National Convention Center (QSNCC) in Bangkok on October 16, 2026. (Photo by Lillian SUWANRUMPHA / AFP)
IMF Managing Director Kristalina Georgieva speaks during the Annual Meetings Plenary at the Annual Meetings of the International Monetary Fund (IMF) and the World Bank Group (WBG) at the Queen Sirikit National Convention Center (QSNCC) in Bangkok on October 16, 2026. (Photo by Lillian SUWANRUMPHA / AFP)

Central bankers around the world would need to consider any slowdown in AI-driven growth as they assess steps in their fight against inflation, International Monetary Fund Managing Director Kristalina Georgieva said on Friday.

Georgieva said concerns about dependence on the AI investment boom and high valuations were impacting markets around the world.

"Things are going up and down, and this is likely to continue," she told an audience at IMF headquarters in Washington, adding that the volatility would complicate the job of central banks at a time when risks to price stability had been growing.

A steep rout in technology stocks on Thursday rippled through markets on fears that ⁠the Democrats' victory ⁠in the US midterm elections would increase regulatory scrutiny of AI and slow the data center build-out, sending investors to the safety of bonds.

The political jitters are hitting an AI trade already on shaky footing due to worry about return on massive spending on AI-related infrastructure, with the meltdown spurring margin calls and spooking retail investors and hedge ⁠funds alike.

Georgieva said the AI investment boom was lifting growth in some countries, helping to offset a negative oil-supply shock triggered by the war in the Middle East, but it was also adding to inflationary pressures and financial stability concerns.

The IMF last month flagged significant growth and financial stability risks from a potential ending of the AI investment boom, among other factors, including a prolonged Middle East war. At the time, it warned that a steep drop in AI investment could lead to a sharp fall in asset prices, ultimately cutting global GDP ⁠by 1.1% ⁠by 2028, including a 1.8% drop in US output.

Georgieva did not repeat the downside forecast on Friday, but acknowledged the recent market volatility.

"Should there be a slowdown in the AI-driven growth impulse, it would need to be factored in as central banks assess the necessary steps in the fight against stubborn inflation," she said.

Democrats are planning to unleash a flood of new legislation targeting artificial intelligence systems and data-center development when they take control of the US Congress in January, Reuters reported on Friday, citing congressional aides and advocates.

That would mark a sharp shift from the Republican-led Congress, where lawmakers largely focused on promoting AI development and declined to pass legislation restricting the technology.


World Food Prices Dip in October, but Remain Higher Than a Year Ago

A worker carries loaves of bread for sale at a bakery in the capital city of Cairo, Egypt November 4, 2026. (Reuters)
A worker carries loaves of bread for sale at a bakery in the capital city of Cairo, Egypt November 4, 2026. (Reuters)
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World Food Prices Dip in October, but Remain Higher Than a Year Ago

A worker carries loaves of bread for sale at a bakery in the capital city of Cairo, Egypt November 4, 2026. (Reuters)
A worker carries loaves of bread for sale at a bakery in the capital city of Cairo, Egypt November 4, 2026. (Reuters)

World food prices edged lower in October as weaker import demand contributed to monthly declines in cereal, dairy and meat prices, but were still nearly 6% higher than a year earlier, the United Nations' Food and Agriculture Organization said on Friday.

The FAO Food Price Index, which tracks monthly changes in international prices for a basket of food commodities, ‌averaged 133.9 points ‌in October, down from a revised ‌135.6 ⁠in September.

The index ⁠was 5.9% higher than a year earlier, but remained 16.4% below its March 2022 peak.

FAO's cereal price index fell 4.5% from September and was 12.6% lower than a year ago, as wheat and maize quotations declined. Wheat prices eased on weak import demand ⁠and improved production prospects, especially in Argentina.

"Expectations of ‌easing constraints on Black ‌Sea export flows added to the downward pressure on prices, ‌although continued disruptions to Black Sea logistics limited the decline," ‌FAO said in a statement.

Maize prices also eased after reaching a three-year high in September, pressured by the US harvest, expectations of ample supplies in South America and renewed ‌prospects of easing tensions in the Black Sea region.

Vegetable oil prices edged up 0.3%, ⁠as ⁠higher soybean and sunflower oil prices more than offset a fall in rapeseed oil prices.

Sugar prices rose 6.6%, their fourth straight monthly increase, to the highest level since December 2024, after rainfall disrupted harvesting in Brazil. They were now 28.8% above a year ago.

The dairy index fell 1.1%, as lower butter and cheese prices linked to ample supplies and subdued demand outweighed gains in milk powder.

The meat index declined 1.2%, while still slightly above its year-earlier level, as ovine and bovine meat prices fell.