Countries in the Middle East, North Africa and Central Asia will need to carry on with plans to diversify their economies and implement policies that support jobs and productivity, like education and infrastructure reforms, says a report called ‘Regional Economic Outlook for the Middle East and Central Asia’ just published by the International Monetary Fund (IMF).
“This more favorable global environment, together with some firming of commodity prices, is providing some welcome breathing space for the region after what has been a difficult period,” said IMF Middle East and Central Asia Department Director Jihad Azour at the launch of the outlook in Dubai but also added that “our projections indicate that growth will be too low to create enough jobs or improve living standards. Many countries – especially oil importers – are also carrying high levels of debt.” Both oil exporters and importers are therefore “facing two critical policy imperatives: fiscal consolidation and structural reforms,” he stressed.
The region’s is expected to grow as oil imports are projected to increase from 3.7 percent in 2016 to 4 percent in 2017 thanks to reforms and policies that have decreased fiscal deficits and strengthened business climate. Non-oil-related growth is poised to accelerate as well from 0.4% percent in 2016 to 2.9 percent in 2017, although production cuts following the OPEC’s deal that will temporarily reduce overall growth. Despite the accelerated growth for the region’s oil-importing countries, the expected growth rates will not be enough to make a serious dent in the region’s high unemployment rate – at about 12%. For the region’s oil-exporting countries, policy adjustments, such as reductions in public spending will continue to constrain economic activity.
The region’s ongoing conflicts continue to exact not only a high humanitarian cost but also significant economic consequences – both for the countries directly involved in them and their neighbors. The IMF is helping countries affected by the conflict to tackle the immediate economic repercussions and support their rebuilding efforts once the conflicts ease. For instance, the IMF is providing technical assistance in Somalia and has provided financial support to Afghanistan and Iraq. “Improving the humanitarian and economic situation in the parts of the region affected by conflicts is not the merely the responsibility of the countries themselves; it is a global imperative,” Mr. Azour emphasized.