As a result of rising oil prices, the increase in production in Arab oil-exporting countries, and continuing reforms that promote growth, the Arab countries are expected to grow at 5.4 percent in 2022, according to the Seventeenth Edition of the Arab Economic Outlook Report (AEOR), published by the Arab Monetary Fund (AMF). Due to local and global inflationary pressures, Arab countries are expected to experience relatively high inflation rates in 2022.
Based on macroeconomic forecasts, growth forecasts, and inflation forecasts for Arab economies for 2022 and 2023, the report indicates that global supply chains and high commodity prices are posing challenges to worldwide food security, raising concerns. The January 2022 forecasts for global economic growth have been revised downward by international institutions as a result.
During 2022 and 2023, significant factors are expected to affect growth paths in Arab countries, including the impact of global developments on Arab economies, macroeconomic policy, and the continuation of financial packages in order to contain COVID-19’s repercussions. Arab economies are projected to grow at about 5.4 percent in 2022, a significant increase from about 3.5 percent in 2021. High sectoral growth rates and a relative improvement in global demand have contributed to this rise.
Implementing economic reform programs and adopting future visions and strategies can also enhance the economy’s diversification, improve business environments, encourage private investment, and improve financial resilience. Due to the global financial slowdown, commodity price declines, and the gradual exit from expansionary fiscal and monetary policies, the AMF expects Arab countries’ economic growth to slow to around 4.0 percent in 2023.
The OPEC+ agreement will lead to increased oil production quantities in 2022, which will support public spending to enhance economic growth in oil-exporting countries. It is predicted that Arab oil producers will grow by 6 percent in 2022, compared to 3.2 percent in 2021, while oil prices will decline in 2023. GCC countries will grow at 6.3 percent in 2022, compared to 3.1 percent in 2021, as a result of a combination of factors, including the recovery from the COVID-19 pandemic, economic reforms, and continued stimulus packages, but the growth rate will decline to 3.7 percent in 2023.
As for other Arab oil exporters, they will benefit from increased production quantities within the OPEC+ agreement and a rise in global oil prices to raise their growth rates. As a result, they are expected to achieve 4.6 percent in 2022, which is higher than 3.1 percent in 2021. However, due to business environment challenges, their growth rate will come down to 3.9 percent next year.
Despite their internal and external balance challenges, oil-importing Arab countries are expected to achieve a moderate 4.1 percent growth rate in 2022 compared to 2.7 percent in 2021. Due to improved aggregate demand levels and a gradual easing of the pressures on public budgets and balances of payments as a result of the expected decline in commodity prices, the group countries are projected to grow at 4.6 percent in 2023.
Some Arab countries will experience relatively high inflation rates during 2022 due to factors such as food price increases, energy price increases, and escalating inflationary pressures. Some countries will also be affected by climate change-induced changes in agricultural production. Consequently, the Arab countries’ inflation rate is expected to reach 7.6 percent in 2022 and 7.1 percent in 2023.