The estimated average growth rate of the gross domestic product (GDP) in the Arab region in real terms was 0.9 per cent in 2015, unchanged from the rate registered in 2014. Oil prices, falling since mid-2014, have strained the economies of Arab countries, which were further pressured by armed conflicts and political instability. The economies of Gulf Cooperation Council (GCC) countries, which had previously led growth in the region, slowed down in 2015, affected by factors including loss of oil export revenues, slow domestic demand expansion and weaker business confidence. GCC countries also faced more challenges in economic diversification strategies. Reform measures, including subsidy reforms, were adopted in those countries, in an effort to cope with lower oil prices.
The growth rate of the Arab region is expected to reach 1.5 per cent in 2016. Economic expansion in GCC countries will further decelerate, due to projected additional cuts in public expenditure. Tightening of the United States monetary policy and an increase in debt issuance by GCC Governments are likely to discourage investments because of rising financing costs. Other Arab countries are also projected to register weak growth due to geopolitical factors, weak demand prospects from China and Europe, and tightened balance-of-payments conditions.
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