The Only Region in the World Forecast to Shrink
The Middle East and Central Asia will contract 0.3% this year, the International Monetary Fund says, against growth of 1.9% it projected in April. Kuwait is forecast to shrink 16.7%, Iraq 16%, Qatar 15.6% and Bahrain 11.3%. No other region in the world is expected to shrink at all.
This is the war’s bill, written out country by country, and the cause the fund names is the closure of the Strait of Hormuz — in peacetime a conduit for a fifth of global oil supplies. Iran is forecast to contract 7.6% and Saudi Arabia 3.3%, the Saudi figure cushioned by pushing exports through the east-west pipeline that bypasses the strait. The contrast with everywhere else is what gives the number its force: emerging and developing Asia is forecast to grow 5.1%, sub-Saharan Africa 4.5% and Latin America 2.3%. Kyrgyzstan, at 9%, is the strongest performer in the same region as the four worst. For a British reader the chain is short. These are the economies that set the oil price, and the same fund that published these numbers also upgraded Britain’s growth this morning while warning that higher energy prices will weigh on consumption and investment next year. Watch whether the contraction forecasts move again if the strait reopens; the fund’s assumptions about Hormuz are doing a great deal of the work.