REPORT: SLUGGISH CREDIT IMPEDES STRONGER RECOVERY IN MIDEAST, N.AFRICA

DUBAI, May 25 (Bernama) -- Economic prospects for the countries of the
Middle East and North Africa have improved with the resumption of capital
inflows and rising crude oil prices, according to the International Monetary
Fund (IMF).

But stress in the banking and financial sectors along with slow credit
activity are weighing on the rebound, the IMF said in its latest Regional
Economic Outlook (REO).

"The outlook for the region has improved considerably from 2009. Growth is
gathering momentum in 2010, helped by the pickup in capital inflows and
resurgence in domestic consumption," said IMF Middle East and Central Asia
director Masood Ahmed.

"However, this positive perspective is clouded by some stress in the
banking system and lethargic credit activity across the region," he observed.

The REO for the Middle East and North Africa, Afghanistan, and Pakistan
(MENAP) was presented Tuesday at the Dubai International Financial Centre.

Governments would have to balance the goal of reactivating credit with the
need to strengthen financial regulations and enhance supervision, particularly
in countries where there was evidence that excessive risk-taking occurred, the
report stated.

It indicated that MENAP oil exporters -- Algeria, Bahrain, Iran, Iraq,
Kuwait, Libya, Oman, Qatar, Saudi Arabia, Sudan, United Arab Emirates, and
Yemen -- were hit hard in 2009.

Their combined current account surplus fell to US$53 billion in 2009, after
having reached US$362 billion in 2008.

Oil GDP for these countries contracted by 4.7 per cent, triggered by
plummeting oil prices.

However, massive stimulus measures helped mitigate the impact of the
crisis, and non-oil economic activity still managed to expand by 3.6 per cent in
2009, the IMF said.

The report sees a strong recovery in the coming year, aided by an increase
in capital inflows and crude oil prices.

Higher oil prices and output are projected to boost the current account
surplus to US$140 billion and oil-GDP growth to 4.3 per cent.

Non-oil sector activity, supported by sustained fiscal stimulus in some
countries, is also forecast to grow by 4.1 per cent.

-- BERNAMA



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