World Bank warns of risks against economic growth in Mideast, North Africa

The Washington-based World Bank Group said on Wednesday that the economic growth in the Middle East and North Africa (Mena) is projected to continue to be affected by geopolitical risks in 2018.

"The risks to the outlook, while varying between oil exporters and importers, are generally to the downside," the World Bank said in a new report titled "Global Economic Prospects".

"Geopolitical risks remain elevated, and are complicated by a variety of intra-regional diplomatic tensions," the report added.

In June 2017, Bahrain, Saudi Arabia, the United Arab Emirates and Egypt cut diplomatic and economic ties with Qatar.

"All seaborne and air travel links from the involved countries to Qatar were shut and bank lending to Qatar was restricted," said the report.

As a result, the growth in the Mena region is estimated "to have declined markedly to 1.8 percent in 2017 from 5 percent in the previous year, contributed by hydrocarbon sector-led growth decelerations among regional oil exporters."

In addition, weaker-than-expected global oil prices may further cloud growth prospects for the Mena region's oil exporters, it said.

On the upside risks, the World Bank said "long-term investor confidence has been bolstered by reforms to foreign investment accessibility and capital market development."

While economic conditions appear to be improving among the oil importers, their prospects are vulnerable to spillovers from armed conflicts in fragile economies such as Libya, Syria and Yemen.

"It remains to be seen whether OPEC and non-OPEC production cuts will affect prices in the light of the fact that U.S. oil inventories remain at high levels, despite stabilizing recently," said the report.

Earlier in the day, oil prices (Brent) surged to a near 3-year high when the barrel (159 liters) jumped to 69.23 U.S. dollars.

On Nov. 30, 2017, OPEC and its partners agreed to extend the output cut to the end of 2018, nine months longer than the previous agreement.

In 2016, the OPEC countries reached an agreement in Vienna to reduce daily oil production during the first half of 2017 to boost global oil prices.