Middle East Central Asia Economy


 

Technically, the Middle East is the region that includes southwestern Asia and Egypt. Most countries located in the region have rich deposits of oil and therefore rely on mining to run the economy.

 

The Middle East is also a region of extremes. If, on the one hand, rich countries such as Qatar, UAE and Saudi Arabia dominate the oil industry around the globe; poor countries such as Gaza and Yemen rely on subsidies and aids.

 

Besides oil, other industries that contribute to the Middle East economy include agriculture, cotton, livestock, textiles, metals and defense equipments.

 

Traditionally, the Middle East and Central Asian economies have been dependent on oil exports. But, like everywhere else in the global economy, the financial crisis has taken a toll on the Middle East and Central Asian economy as well. The Middle East economy was hit in 2008-2009, as oil prices tumbled.  But the downturn proved to be a blessing in disguise for countries like Qatar due to high demand for gas. For most Middle East countries, the prime cause of the decline in their GDP was the cut in oil production by the OPEC. The following table shows the percentage of GDP change in 2009 and the 2010 forecasts:

 

Country

 

2009

 

2010 Projections

 

Bahrain

3%

 

3.7%

 

Iran

1.5%

 

2.2%

 

Iraq

4.3%

 

5.8%

 

Kuwait

-1.6%

 

3.2%

 

Oman

4.1%

 

3.8%

 

Qatar

11.8%

 

18.5%

 

Saudi Arabia

-0.9%

 

4.0%

 

United Arab Emirates

-0.2%

 

2.4%

 

Yemen

4.2%

 

7.3%

 

 

The table below shows the rate of inflation in Y2009 and the Y2010 forecasts for the countries mentioned above:

 

Country

 

2009

 

2010 Projections

 

Bahrain

3%

 

2.5%

 

Iraq

6.9%

 

6.0%

 

Iran

12.0%

 

10.0%

 

Kuwait

4.6%

 

4.4%

 

Oman

3.3%

 

3.0%

 

Qatar

0.0%

 

4.0%

 

Saudi Arabia

4.5%

 

4.0%

 

United Arab Emirates

2.5%

 

3.3%

 

Yemen

8.4%

 

8.9%

 

 

According to the National Bank of Abu Dhabi, the OPEC will begin to increase oil production once the economy gains traction. Analysts predict that oil prices would reach an average of $75 in 2010, as compared to $62 in 2009. This would imply better performance by OPEC members, in comparison with their non-OPEC counterparts, such as Oman and Yemen. If oil prices reach the predicted levels, the Middle East economy will witness growth, as reported by the International Monetary Fund (IMF). According to the IMF, Saudi Arabia and Qatar would be the fastest growing GCC countries, while the UAE will experience relatively slower growth. The report further mentioned that the combined fiscal balance of the GCC states fell from 27.4% of the GDP in 2008 to 5.3% of the GDP in 2009. A recovery in oil prices would push the contribution to up to 10.4% by 2010.

 

Middle East Economy, Middle East and Central Asian Economies

The Caucasian and Central Asian (CCA) region was also badly hit by the global financial meltdown of 2008-2009. The overall growth of the region dropped from 6.6% in 2008 to 1.5% in 2009. However, due to links with international markets and long-term contracts, the region is expected to witness a recovery in 2010.

 

The main energy exporters, Azerbaijan, Turkmenistan and Uzbekistan, are expected to see growth in 2010. Kazakhstan, the biggest economy of the CCA, reported negative GDP growth of 2% for 2009. But with the rising demand for energy in the international markets, growth rates are looking positive for 2010. The growth in energy GDP is projected to be 7.4% in Azerbaijan, 2.0% in Kazakhstan, 15.3% in Turkmenistan, 7.0% in Uzbekistan, and 3.0% in both Kyrgyzstan and Tajikistan.

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