Arab Upheavals to Boost Mideast Economies?
IMF report: "Changes taking place in the region could provide a boost for its economies."
By Gil Ronen
First Publish: 4/28/2011, 12:56 PM / Last Update: 4/28/2011, 1:12 PM
The wave of violent upheavals shaking the Arab world could eventually boost and revitalize the region's economies, the International Monetary Fund (IMF) said Wednesday.
In the short term, however, the region's oil-importing economies - including Egypt, Tunisia and Syria - face a problematic rise in crude oil prices alongside a "virtual standstill in tourism and foreign direct investment." According to the IMF's Regional Economic Outlook report, these developments raise the possibility of "spreading unrest, sharply higher oil prices, and rising fiscal deficits."
The oil-importing economies will grow by just 2.3% this year, the Washington-based body predicted. In Egypt, economic growth may drop from 5.1 percent last year to just 1.0 percent this year.
However, in the longer term, the changes taking place in the region "could provide a boost for its economies," the global economic body said. "A more inclusive reform agenda that meets the population's demands by providing greater access to opportunity and more competition would make the economies more dynamic and leverage the region's inherent strengths."
Regional strong points, it explained, include "a young labor force and a privileged geographic position at the crossroads between major markets in Europe and fast-growing emerging and developing economies in Asia and sub-Saharan Africa."
The IMF earlier this month revised its economic growth projection for the Middle East and North Africa region to 4.1% this year, down from a prediction of 4.6% growth made in January.
The economies of Egypt and Tunisia will also suffer from the effects of the civil war in neighboring Libya, which is causing the return of more than 100,000 migrant workers to their homelands.
The IMF urged Mideast leaders to create jobs for their population while tackling corruption. "The unfolding events make it clear that reforms, and even rapid economic growth ... cannot be sustained unless they create jobs for the rapidly growing labor force and are accompanied by social policies for the most vulnerable," the fund said.