07/07/2012
The Institute of International Finance in its report on the development of global economic conditions for the months of June and July said that it has cut its forecast for global economic growth for the current year to 2.2 per cent. This declining forecast is a clear evidence of the negative impact of the crisis in the EU area on the global economy. There was a decline in European demand for oil, as well as exports to key countries such as China and India. The Institute also adds other factors contributed to the weak global economy. These mainly included the surge in oil prices during the first quarter of the year, which has affected many of the economies and force them to adopt the tight monetary policies in some emerging countries.
The Institute shows that, with respect to oil-exporting countries, the impact of the European crisis will be experienced in the short term, as evidenced by the decline in oil prices recently. This will cause a reduction in current account surpluses of the Gulf Cooperation Council (GCC), but will remain at high levels, which is expected to reach 24 per cent of GDP in 2012 and 23 per cent in 2013. As a result of these surpluses, the net foreign assets of the Gulf Cooperation Council (GCC) will slightly increase to reach $ 1.75 trillion. Therefore, the impact of the crisis on economic growth would be slight, where economic activity will continue to rise mainly by the growth of government spending.
