Growth in Nigeria picked up to an estimated 2% in 2018, double the rate the year before, supported by recover- ing oil production (representing one- third of the economy). However, activity in the non-oil non-agricultural sector remained weak, as the effect of high inflation reduced consumer demand and as credit risk continued to limit bank lending. To help deliver higher growth, the authorities implemented reforms to improve the business environment, including the identification of priority investment projects, the adoption of the Company and Allied Matters Act (for private sector development), and the Power Sector Recovery Plan. Meanwhile, annual average inflation slowed to its lowest level in more than two years, but at over 12% it highlighted tight liquidity conditions, shortages of some goods and strong demand. Another fiscal deficit of around 5% of GDP was expected in 2018. Corporate tax collection efforts improved but revenue shortfalls and the late adoption of the 2018 budget impeded its implementation (interest payments now absorb more than half of revenues). Revenue from higher oil prices was limited by net losses from retail fuel sales, while non-oil revenue remained below expectations. Despite the rise in oil prices, oil production disruptions and sustained, strong import demand led to the current account surplus narrowing to 2% of GDP in 2018, well below the average of 14% between 2004 and 2008.
Qatar’s economic performance strengthened in 2018, reflected in real growth of 2.5%, which was one percent- age point higher compared to 2017. Non-hydrocarbon output expanded as the economy recovered from the impact of neighbouring tensions, ongoing significant public infrastructure spending, and from the indirect effect of rising oil prices. However, hydrocarbon output fell partly to meet OPEC and non-OPEC producers’ targets set out in the Declaration of Cooperation and as gas production decreased slightly. Inflation accelerated nearly 4% in 2018, a comfortable level, reflecting the relatively subdued level of economic activity and the effect of the Riyal’s peg to the US
dollar. Despite higher oil prices that raised hydrocarbons revenues, the authorities continued to pursue a prudent fiscal policy. Expenditure growth was contained, with continued emphasis on allocation to critical sectors (health and education). This resulted in the fiscal balance returning to a surplus, estimated at nearly 4% of GDP, from a deficit of almost 2% in 2017. Meanwhile, the current account remained in a comfort- able surplus of 5% of GDP, one percent- age point higher compared to the year before. The improvement was driven by a moderation in imports and rising oil prices.
Real GDP in Saudi Arabia expand- ed by an estimated 2% in 2018, a strong rebound compared to the previous year. Non-oil growth strengthened due to the effect of Vision 2030 reforms that are part of the policy shift to diversify the economy, and the indirect effect of oil price rises on ongoing investment, particularly in infrastructure and services. Hydrocarbons growth reflected in- creased oil output, in-line with commit- ments to OPEC and non-OPEC producers’ Declaration of Cooperation targets. Annual average inflation acceler- ated nearly 3% during 2018, which partly highlighted the impact of the introduc- tion of value-added tax and higher gasoline and electricity prices. However, the Riyal’s peg to the US dollar con- tained any further acceleration. Mean- while, the fiscal deficit narrowed significantly, to 4.5% of GDP in 2018 from 9.3% the year before, helped by expenditure-related reforms along with higher oil revenues. The current account surplus widened to over 8% of GDP in 2018, driven by the effects of higher oil production and prices despite import demand remaining strong.
The United Arab Emirates’ financial buffers, safe-haven status, sound banks, and diversified and business- friendly economy helped sustain the growth momentum. With a gradual recovery in non-oil activity and higher government spending related to the Vision 2021 National Agenda, along with higher oil production from mid-year onwards, overall real growth is estimated
to have picked up to 3% in 2018. Stronger growth pushed up annual average inflation to 3.5%. The long-stand- ing peg to the US dollar contained any further acceleration, but inflationary pressures also arose from the impact of the introduction of value-added tax and the effect of higher government spend- ing that raised demand for goods and services. Meanwhile, amid growth in government expenditure, higher oil prices boosted oil revenues, which helped transform a fiscal deficit in 2017 into a surplus of nearly 1% of GDP. Another current account surplus of 7% of GDP is estimated in 2018, similar to the year before. This was partly due to the pick-up in oil prices, and robust services performance on account of the UAE continuing to develop its role as a regional and global hub for trade, finance, transport and tourism.
The economy in Venezuela contract- ed by an estimated 18% in 2018, continuing a downward trend seen since 2004. The increase in average oil prices in 2018 indirectly helped lift consump- tion despite the effect arising from the oil production cap agreed between OPEC and non-OPEC producers in the Declaration of Cooperation. Supply side bottlenecks, low levels of public invest- ment and private investor caution remained evident last year, which helped undermine the economy and its prospects. The fragile economic situation was reflected in hyperinflation, which compounded the structural challenges facing the authorities. The fiscal position also remained weak, reflected in low oil revenues largely caused by a fall in oil output and strong demand for govern- ment services. A primary fiscal deficit of an estimated 30% of GDP in 2018 was relatively unchanged compared to the deficit in 2017. On a more positive note, the current account surplus widened to an estimated 6% of GDP in 2018, up from 2% the year before. This was driven mainly by a combination of the effect arising from higher oil prices and weak import demand.
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