IMF concerned about the Middle East due to inflation and oil prices

(Patria) - Banks in the Middle East and Central Asia have very limited exposure to last month's banking turmoil in the United States and Europe, but financial pressures are contributing to strains caused by high interest rates, volatile oil prices, and years of double-digit inflation, a senior IMF official said, Reuters reports.

Jihad Azour, director of the Middle East and Central Asia Department at the International Monetary Fund, said that tensions in the banking sector have come amid a tighter monetary policy that has raised rates and reduced the availability of finance.

Azour pointed out that there is a growing gap between countries that had a good image and could access markets, including Morocco, Jordan, and oil exporters, and others that struggled.

- We are concerned because the risk matrix is constantly growing: high interest rates, oil price volatility, geopolitical tensions, and it is the third year in a row that you have double-digit inflation - he stated.

Stability in the financial sector has not been the primary concern, he said, for now overshadowed by concerns about high debt levels, risks of social unrest, and the ability to maintain tight policies due to pressures on the social front.

- We see vulnerabilities increasing again, and that is why countries are encouraged to carry out more structural reforms, to accelerate their growth by at least one or two percent - he said.

The IMF predicted on Thursday that GDP growth in the Middle East and North Africa region will slow to 3.1% in 2023, down from 5.3% a year ago.