Wires

MidEast oil exporters' economic growth to accelerate in 2012-IMF

Oct 9 (Reuters) - The Middle East and North Africa's oilexporting countries will see economic growth accelerate in 2012to 6.6 percent, mainly due to a strong rebound of activity inLibya, the International Monetary Fund said on Tuesday.

The forecast marked a rare upgrade in the IMF's semi-annualWorld Economic outlook report after it downgraded itsexpectations for global growth.

The IMF had forecast growth of 4.8 percent across the oilproducing economies of the Middle East and Africa in itsprevious semi-annual review in April. Growth in 2011 was 3.9percent.

However, it forecast that 2012 GDP in Iran, suffering frominternational sanctions over its disputed nuclear programme,would fall 0.9 percent to product the country's first economiccontraction since 1994. In April, it had forecast growth of 0.4percent.

"In most ... oil exporters, non-oil GDP growth is expectedto remain robust in 2012, supported by ratcheted-up governmentspending as oil prices remain at historically high levels, whileoil-sector growth is forecast to moderate somewhat after astrong increase in 2011," the IMF said.

It attributed the pick up in its expectations for the oilexporting grouping largely to increased economic activity inLibya since 2011.

The Fund included Sudan among oil importers in its latestreview following the secession of South Sudan in 2011. It hadlisted Sudan among the oil exporters in its April report.

Near-term risks mainly stem from oil prices and globalgrowth, the Fund said: "For oil exporters, governmentexpenditures have risen to such a degree that substantialdeclines in the price of oil could undermine fiscal positions."

"Despite significant accrued financial buffers, suchdeclines could put at risk ongoing infrastructure investment andgrowth," it said.

However, geopolitical risks, including those related toIran, could lead to higher oil prices, the IMF said.

"In oil exporters, it will be critical to contain increasesin spending on entitlements that are hard to reverse," the Fundsaid, adding that a priority should be to take advantage of highoil prices to diversify economies away from hydrocarbons.

Crude prices have been on a roller-coaster ride this year,sliding to lows of around $88 per barrel in June from a Marchpeak above $128 . They were around $110 this week.

OIL IMPORTERS WEAK

In contrast, the IMF cut its 2012 forecast for growth amongthe region's oil importers to 1.2 percent from 2.2 percent inApril as countries from Morocco to Jordan suffer from socialunrest, economic weakness in Europe and high oil prices.

The group's GDP rose 1.4 percent in inflation-adjusted termsin 2011, the IMF said. Syria is excluded due to the civil war.

The IMF raised its forecast for 2012 growth in Egypt,weakened by economic turmoil since the popular uprising lastyear, to 2.0 percent from 1.5 percent predicted in April.

However, this year's growth prospects for Morocco, hit bydrought and the slump in the European Union, worsened. The IMFnow sees 2012 growth of 2.9 percent, compared with an Aprilforecast of 3.7 percent.

"Because of extensive food and fuel subsidies in mosteconomies, the immediate concern with spikes in commodity pricesis not the effect on inflation and disposable income, but ratherthe strain on budgets and foreign exchange reserves," the IMFsaid, referring to oil importers.

"Structural fiscal reforms aimed at reorienting governmentspending toward poverty reduction and the promotion ofproductive investment will be crucial to improving the budgetoutlook," the Fund said.

(Reporting by Martin Dokoupil in DUBAI; Editing by NeilFullick)

((Martin.Dokoupil@thomsonreuters.com)(+971 4 362 5832)(ReutersMessaging: martin.dokoupil.thomsonreuters.com@reuters.net))

Keywords: IMF MIDEAST/