Public debt has rapidly increased in many Arab countries since the 2008 global financial crisis, due to persistently high budget deficits, the International Monetary Fund warned. Unfortunately, the region has yet to fully recover from the global financial crisis and other big economic dislocations over the past decade, IMF Managing Director Christine Lagarde said. Lagarde said public debt among Arab oil importing nations had increased from 64 per cent to 85 per cent of Gross Domestic Product in the decade since 2008. Nearly half of these countries now have a public debt of over 90 per cent of GDP, she said.
The IMF warned governments to gear up for a possible economic storm as growth undershoots expectations. We see an economy that is growing more slowly than we had anticipated, the IMF Managing Director Christine Lagarde told the World Government Summit in Dubai.
Lagarde cited what she called four clouds as the main factors undermining the global economy and warned that a storm might strike. The risks include trade tensions and tariff escalations, financial tightening, uncertainty related to (the) Brexit outcome and spillover impact and an accelerated slowdown of the Chinese economy, she said. Lagarde said trade tensions — mainly in the shape of a tariff spat between the United States and China, the worlds two biggest economies — are already having a global impact.
We have no idea how it is going to pan out and what we know is that it is already beginning to have an effect on trade, on confidence and on markets, she said, warning governments to avoid protectionism. Lagarde also pointed to the risks posed by rising borrowing costs within a context of heavy debt racked up by governments, firms and households. When there are too many clouds, it takes one lightning (bolt) to start the storm, she said