IMF Says MENA Region Vulnerable To Worsening In Europe Crisis - Zawya

A renewed crisis in Europe would push down oil prices and hurt economic growth in several Middle East and North African countries, adding to the uncertainties for the region caused by rising tensions with Iran, the International Monetary Fund said Tuesday.

In its latest World Economic Outlook, the IMF said the Middle East and North African (MENA) region is especially vulnerable to an intensified European debt crisis, because it would depress oil prices and affect the close trade and tourism links between the two regions. The IMF calculated that a reemergence of the European crisis would depress growth in the whole MENA region by 3.25%, which it said was "the largest spillover effect for any region outside Europe."

Saudi Arabia and other oil exporting countries in the Middle East have greatly increased their spending on social programs in the aftermath of the Arab spring, in an effort to deter any spread of unrest, making them reliant on continued high oil prices. Even a relatively small fall in the price of oil due to a worsening crisis in Europe could create budget deficits in some oil exporting countries, the IMF said.

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