The Gulf economies are expected to grow 4.5 per cent in 2014-15, Christine Lagarde, Managing Director of the International Monetary Fund (IMF), said in a statement.
"The GCC economies have been amongst the best performing in the world in recent years. The near-term outlook is positive, with growth of about 4½ per cent projected in 2014-15. Particularly, growth in the non-oil sector is expected to remain strong at about 6 per cent, driven by large investments in infrastructure and private sector confidence.
"Oil prices have fallen by about 25 per cent since the summer, and this will affect fiscal and external balances in the region. While the substantial fiscal buffers that have been built-up in most countries over the past decade will allow governments to maintain spending plans in the near-term, in almost all GCC countries it increases the urgency for fiscal consolidation in the medium-term," she said following a meeting in Kuwait with the finance ministers and central bank governors of the GCC and the inauguration of the IMF-Middle East Center for Economics and Finance.
The International Monetary Fund will announce its Middle East and Africa Regional Outlook report on Monday, October 27, in Dubai.
She said: "There is scope to strengthen policy frameworks in the GCC to support economic management. On the fiscal side, this could involve reforms to the annual budget process and the introduction of a medium-term budget framework. Regarding macro prudential policies, the introduction of a formal macro prudential policy framework would clarify responsibilities and coordination among regulators.
"The future success of the GCC economies will be closely tied to ongoing efforts to boost the employment of nationals in the private sector and to increase economic diversification. Many policies are being implemented to achieve these objectives, and important progress is being made. Nevertheless, getting the economic incentives right so as to encourage workers to seek employment in the private sector and firms to produce in exported-oriented sectors is a key missing element of policies to date," IMF managing director said in a statement.
She said the IMF-Middle East Center for Economics and Finance is a premier location for economics training for government officials and it has now provided training to more than 3,600 officials from the 22 countries of the Arab League.