Mideast growth to halve as oil falls: World Bank

Economic growth in the Middle East and North Africa is set to halve to 3 percent this year with the collapse of oil prices, demand and worker remittances, a senior World Bank official said on Tuesday.

Daniela Gressani, World Bank vice president for the region, said countries outside the Gulf such as Iran, Syria and Algeria, which have expensive state subsidy programs, will be hit the hardest by lower oil prices.
“Even though they have large buffers we expect they will be affected more seriously,” Gressani said, speaking after weekend meetings of the World Bank and International Monetary Fund.

The biggest concern raised was the impact the crisis will have on social conditions should it drag on longer than expected.

The issue is worrying because most of those countries have inefficient social systems for the poor, with resources locked up in the subsidy programs that are politically and socially difficult to remove.

She said the subsidies for energy and food were expensive and inefficient because they did not reach the poorest and can encourage bad consumption decisions.

Reuters