Continuing a trend since 2016, average regional inflation will rise again in 2017, reaching almost 13 percent. With medium-term growth prospects remaining relatively subdued, implementation of structural reforms is essential to successfully diversify away from commodities, reduce reliance on remittances, and ensure sustained and inclusive growth. This is a substantial improvement predicated on the sustained implementation of these ambitious fiscal plans and helped by projected oil price trends. The Middle East Peace Process remains challenging, and parts of the region risk losing a whole generation of out-of-school children to fragility, conflict and violence. The improvement relative to October also reflected significant revisions to economic activity in Kazakhstan due to the impact of currency adjustment, lagged effects of earlier fiscal stimulus, and oil production from the new Kashagan field.
Reforms promoting diversification away from remittances and commodities should therefore be accelerated to secure strong, sustainable, and inclusive growth. It also has country offices in , , , , , , Pakistan, and. This is ever more important considering the large uncertainty surrounding the policy positions in the United States and other advanced economies, which could have significant global ramifications see Global Developments section. This captures forgone revenue that could otherwise have been captured by aligning retail prices to market-based prices. It also has regional offices in Fiji and Thailand.
President Donald Trump again threatened to impose higher tariffs on Chinese exports sent to the United States. Inflation in Georgia declined as a result of weak demand and low global oil and food prices. Nevertheless, countries that have taken steps to introduce a formula-based pricing regime have enjoyed a relatively greater reduction in subsides Figure 1. Policymakers should also closely monitor developments in real estate prices and assess vulnerabilities of the financial system to property price corrections and liquidity pressures. Labor market reform, including as part of improving the broader business environment, will be key to this process. The world is watching closely as the second largest economy in the world is shifting its growth model from an export-driven one to one centered on household consumption. This reflects increased spending in all countries, especially the Kyrgyz Republic, where fiscal accommodation continued amid a shortfall in tax revenues.
Global growth is gaining momentum and is projected to reach 3. In Iraq, the fiscal stance is expected to loosen somewhat as the receipt of previously delayed donor financing relaxes the cash constraint faced in 2016. K Brent, Dubai, and West Texas Intermediate crude oil. Made up of , it has a geographical scope that stretches from Turkey in the west to the Pacific island nation of Kiribati in the east, and from the Russian Federation in the north to New Zealand in the south. With current policies, Turkey's economy is expected to grow only 3. However, little improvement is anticipated in the current account deficits of oil importers. Non-oil growth is generally recovering, but the muted medium-term growth prospects highlight the need for countries to push ahead with diversification and private sector development.
However, profitability is declining, liquidity has tightened in most countries—although it has eased in recent months in Saudi Arabia and the United Arab Emirates—and pressures on asset quality are emerging in some countries. For example, public funds should support only viable systemic institutions, with well-defined and fully collateralized guarantees, and shareholders must not retain any claims on assets when support is provided. And accommodative macroeconomic policy stances, coupled with limited slack in some economies, have added to inflation pressures. Such large debt stocks not only undermine investor confidence, they can also add to financial stability risks, given large holdings of debt by the banking sector and generally shallow financial markets. Countries will need to adapt to this environment of lower oil prices and liquidity to ensure the continued availability of credit to support the private sector. The center of global economic growth is moving from the West to Asia. It will also require renewed efforts to strengthen tax administration Afghanistan, Mauritania, Morocco, Pakistan, Somalia, Sudan, Tunisia.
Further improvements to monetary policy frameworks are needed to support exchange rate flexibility and inflation targeting. These will need to be part of a broader package of labor market reforms to encourage the increased employment of Saudi nationals in the private sector. Continued efforts to improve private sector access to finance will be needed to support successful diversification. However, as economic activity continues to recover, inflation in oil importers is projected to accelerate to 4. In Saudi Arabia, authorities are planning to increase fees on expatriate labor. The delivery of cash transfers has been rolled-out nationally in all 333 districts in Yemen, has -so far- reached 1. Iraq surpassed oil production expectations in 2016, but limited fiscal space for oil-related investments implies little potential for further growth in oil output in the near term Figure 1.
The following conventions are used in this publication: - In tables, ellipsis points. In Kazakhstan, growth slowed, despite relatively strong activity in agriculture, construction, and transportation. In contrast, oil exporters should focus on economic diversification to produce and export a broader range of goods and services. While some initiatives have been launched—such as the 100 Concrete Steps in Kazakhstan and the Four Point Reform Plan in Georgia, which cover administrative reforms, improvements in the business environment, and the strengthening of the legal framework—their implementation will require a reduction in the role of the state, which may prove challenging. And in Tunisia, the projected near-term recovery has been revised down slightly, as a result of continued uncertainty and weak tourism. Growth is expected to increase from 2. Risks Remain to the Downside, Partly Reflecting the Uncertain Global Environment The outlook remains vulnerable to changes in oil prices and the global outlook, and to geopolitical developments.
We tend to forget, however, that these are not the only central banks that are struggling to adapt their policies to changing circumstances in our connected world. Credit markets were initially shielded from the slowdown in deposit growth that resulted from lower oil prices Figure 1. Expectations of future inflation have picked up. There are also five national offices. Last Updated: Apr 20, 2018 The World Bank remains engaged in a wide variety of development work, , while also focusing on alleviating some of the immediate challenges arising from the crisis gripping some countries of the region. Currency stabilization and easing inflation pressure have allowed some central banks to reduce policy rates on various occasions since early 2016. The approach, to leverage private sector financing sustainably in support of development, is now an integral part of Bank Group programs in almost all countries in the region, with sub-regional strategies developed for the Maghreb, the Mashreq, and Egypt.