Doha: The IMF has revised down its projections for 2013 global growth by 0.2 percentage points to 3.3 percent, yet again pushing back the expected recovery. The IMF’s forecasts for 2013 growth were revised down in each of its last three quarterly updates to the World Economic Outlook, from a peak forecast of 4.1 percent made a year ago. The IMF now does not expect the global economy to achieve 4 percent growth until 2014.
However, according to QNB Group, with growth in the world’s largest economies slowing, the IMF outlook for 2013-14 may be too optimistic and the trend of downward revisions to forecasts is likely to continue. The eurozone continues to languish in recession with growth contracting at an annualised rate of 0.6 percent in Q4 2012 and expected to contract at the same rate in Q1 2013.
Growth in China has been slowing consistently and Q1 2013 year-on-year growth of 7.7 percent disappointed as it was below expectations of 8 percent. After weak annualised growth of 0.4 percent in Q4 2012, the US recovered in Q1 2013 to 3 percent, driven by stronger consumer spending. The US is a prime candidate for driving acceleration in global growth in 2013-14. However, the outlook remains unclear. The strong Q1 growth figures may just be a bounce back from a weak Q4 2012 and quarterly growth figures have been volatile in recent years.
The IMF expects the US economy to expand by 1.9 percent in 2013 and 3 percent in 2014 and the eurozone to recover from a 0.3 percent contraction in 2013 to a growth of 1.1 percent in 2014. As a result, advanced economies are expected to deliver overall growth of 1.2 percent in 2013 and 2.2 percent in 2014.
The outlook for emerging markets and developing economies is positive with a gradual pickup in growth from 5.1 percent in 2012 to 5.3 percent in 2013 and 5.7 percent in 2014. China and India are expected to drive this acceleration. India is expected to pick up from 4 percent in 2012 to 5.7 percent in 2013 and 6.2 percent in 2014 while China is expected to accelerate from 7.8 percent in 2012 to 8 percent and 8.2 percent. However, the outlook for China may need to be given its disappointing Q1 2013 GDP. Recent data has heightened concerns about the downside risks to China growth, mainly related to the banking sector, which has high levels of non-performing loans and is over-exposed to the indebted real estate sector.
In 2012, nearly every region covered by the WEO experienced a slowdown in growth. The only regions with accelerating growth were Mena and the “Asean-5” (Indonesia, Malaysia, Philippines, Thailand and Vietnam). Mena accelerated from 4 percent in 2011 to 4.8 percent in 2012, despite political transitions in a number of countries. Meanwhile, Asean-5 growth accelerated from 4.5 percent to 6.1 percent. However, the IMF expects growth to decelerate in 2013 in both regions, dropping to 3.1 percent in Mena and 5.9 percent in the Asean-5.
Within Mena, growth in oil exporting countries has been stronger than in oil importers. However, hydrocarbon production is likely to level off in 2013, putting a cap on regional growth. Saudi Arabian crude oil production averaged 9.5m barrels per day in February 2013, down from its highs of over 10m in 2012 when production was ramped up to ensure oil markets remained well supplied. The completion of the current phase of Qatar’s LNG expansion programme is another important factor in the levelling off in growth in Mena oil and gas exporters.
Oil importers
Despite the regional instability caused by the ongoing crisis in Syria, oil importers are bouncing back slightly from the negative impact on growth of their political transitions. Growth in this group of countries picked up from 1.4 percent in 2011 to 1.9 percent in 2012 and is expected to rise further, although there remains considerable downside risks associated with the uncertainties of political transition. Growth may be being helped by some positive indicators such as a recovery in tourism Tunisia and better-than-expected agricultural harvests in Sudan.
Therefore, the difference between growth rates of oil exporters and importers is likely to narrow in 2013-14. Mena oil exporters are expected to grow by 3.2 percent in 2013 and 3.7 percent in 2014 while oil importers are expected to grow by 2.7 percent and 3.7 percent.
This convergence will be encouraged by the expected downward trend in oil prices, which the IMF expect to be 2.3 percent lower in 2013 and a further 4.9 percent lower in 2014, on average. This would lower revenue for oil exporters, dampening economic performance, while it should reduce import costs for net importers, providing an economic boost.
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