International Monetary Fund. Middle East and Central Asia Dept.
Countries in the Middle East, North Africa, Afghanistan, and Pakistan (MENAP) region and those in the Caucasus and Central Asia (CCA) responded to the COVID-19 pandemic with swift and stringent measures to mitigate its spread and impact but continue to face an uncertain and difficult environment. Oil exporters were particularly hard hit by a “double-whammy” of the economic impact of lockdowns and the resulting sharp decline in oil demand and prices. Containing the health crisis, cushioning income losses, and expanding social spending remain immediate priorities. However, governments must also begin to lay the groundwork for recovery and rebuilding stronger, including by addressing legacies from the crisis and strengthening inclusion.
This paper discusses the oil economy, outlook, and risk for Norway. Growth has continued to slow in the mainland economy. At the start of this year, oil prices had dropped by roughly 60 percent from their peak in June 2014 to less than US$40 a barrel. The labor market is feeling the sting of the oil price crash. The krone has weakened substantially along with the decline in oil prices. However, a modest recovery should take root next year. Mainland economy growth should be about 1 percent this year and pick up to close to 1¾ percent in 2017.
Kuwait’s economy was affected significantly by the global crisis. The financial sector experienced funding pressures and deterioration in asset quality. The economic outcome depends largely on government spending and the associated private investment. Stress tests indicate that the banking system can withstand shocks. The macroeconomic policy mix is adequate, but growth of current expenditures should be contained. Successful implementation of the growth agenda requires progress in structural reforms. The financial system’s oversight framework should be strengthened. The household debt relief law can undermine the financial culture.
Kuwait’s economy continued to perform strongly in 2008, although signs of weakness emerged in the second half of the year. The authorities’ key challenge in the near term is to preserve financial stability and cushion the impact of the global slowdown. Executive Directors have commended the Kuwaiti authorities’ prudent macroeconomic policies, which have contributed to robust economic growth, strong fiscal and external positions. Directors have also called for strengthening oversight of risk management practices by ensuring adequate policies and procedures for identifying, monitoring, and controlling systemic risk in the financial system.
International Monetary Fund. External Relations Dept.
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