Press Release No. 13/391

IMF Deputy Managing Director Nemat Shafik Highlights the Strong Macroeconomic Performance of GCC Countries and Encourages Further Reforms

October 5, 2013

Nemat Shafik, Deputy Managing Director of the International Monetary Fund (IMF), issued the following statement today at the conclusion of a meeting in Riyadh, Saudi Arabia, with the finance ministers and central bank governors of the six-nation Gulf Cooperation Council (GCC):¹

“I am grateful for the opportunity to meet with the finance ministers and central bank governors of the GCC. At a time when the global economy is still struggling to rebound from the global crisis in a meaningful way, organizations such as the GCC that bring together countries in a cooperative spirit to discuss and solve mutual problems have proven effective and are needed more than ever.

“The contribution of the GCC countries to the global and regional economy continues to be vital. The GCC countries remain pillars of stability in the global oil market at a time when uncertainties are arising elsewhere. Moreover the remittance outflows from expatriates working in the region and the generous financial assistance provided are important income sources for other countries.

“While prospects remain challenging for many countries throughout the Arab World, the GCC economies are continuing to perform well. Growth is projected at 3.7 percent this year, lower than the exceptionally strong average rate of 6.4 percent in 2010–12, but favorable by global standards. Growth in the GCC is forecast to pick-up to 4.1 percent in 2014 as oil production rises and the non-oil sector benefits from the large infrastructure projects being implemented.

“Given the substantial buffers that have been built-up in recent years, fiscal policy is well positioned to respond to the challenges that may stem from the continued uncertain global environment. Fiscal consolidation is needed over the medium-term, and this has been set in motion in most countries this year. Continuing on this consolidation path next year is appropriate, although fiscal policy has room to respond to external shocks. Macroprudential policies can be used to prevent any possible build up of risks in the financial system.

“Creating jobs for the young and growing working age population in the region is a key challenge. The GCC is successfully creating jobs, but additional reforms could help in containing the growth of public sector jobs to reset expectations and realign incentives and strengthening education outcomes to create a high-skilled workforce. At the same time, it is important to consider ways of further expanding employment opportunities for women.

“I thank H.E. Sheikh Ahmed Bin Mohammad Al Khalifa, Bahrain’s Minister of Finance, for chairing this meeting and H.E. Dr Abdul Latif bin Rashid Al Zayani, GCC’s Secretary General, for hosting the meeting.”

¹ The GCC is comprised of Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the United Arab Emirates.