CHAPTER ONE • OFID MEMBER COUNTRIES IN 2018
OFID Member Countries in 2018 Background 2018
saw marked differences in performance across countries and regions
Global economic growth was relatively steady in 2018 compared to the year before, maintaining the positive trend seen since the 2007-08 global financial crisis. However, there were marked differences in performance across countries and regions that curbed global growth. A major development last year that undermined investor and business confidence was weakening financial market sentiment, particularly in developed economies. This was ampli- fied by trade policy uncertainty and concerns about China’s economic outlook. Nonetheless, the overall positive growth environment helped stoke energy demand. This pushed Brent oil prices to an average of US$71.3/ barrel in 2018 from US$54.7/b the year before, helping improve prospects for OPEC Member Countries.
A stronger oil price environment in 2018 helped drive greater levels of investment in most of OFID’s Member Countries. In turn, this raised growth and economic confidence, which helped push up inflation in these countries. However, the low inflation backdrop in developed economies and the limited rise in US interest rates helped sustain a build-up of
Economic data for 2018 is based on estimates and is subject to change.
global debt to an alarming level. These imbalances continued to undermine prospects for OFID‘s Member Countries, which endured another uncertain year.
The rise in annual average oil prices in 2018 helped drive Algeria’s real growth up one percentage point to an estimated 2.5% compared to the year before. This was despite the oil production cap agreed between OPEC and non- OPEC producers in the Declaration of Cooperation, along with weak external demand for gas from Europe. Hydrocar- bons sector investment (the sector accounts for around 25% of GDP) was sustained by the effect of higher oil prices, but ongoing fiscal consolidation efforts slowed non-hydrocarbons growth, although construction and services continued to expand. Meanwhile, annual average inflation accelerated around 6.5%, a slightly higher rate compared to 2017, reflecting the pick-up in demand for goods and services. Fiscal adjustment efforts last year were relatively successful, building on the introduction of a medium- term expenditure framework in 2016. Overall spending was cut, which offset an increase in current expenditure, with dividends from the central bank helping to reduce the overall fiscal deficit from 9% of GDP to 7%. The current account deficit also narrowed, largely as import demand was subdued and export revenues picked up reflecting rising oil prices.
1.1 World output by regions (real GDP, annual % change)
10 8 6 4 2 0
-2 2014 18 2015 2016 2017 2018e 2019
World Developing Asia
Latin America & Caribbean Middle East & North Africa Sub-Saharan Africa
Source: IMF World Economic Outlook, Oct 2018
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