IMF predicts growth spurt for greater Middle East region

Higher oil prices expected to buffet growth of regional economies; strong energy sector said to mask underlying economic problems.

October 24, 2010 13:00
2 minute read.
A natural gas pipeline [illustrative].

A natural gas pipeline [illustrative].. (photo credit: Courtesy)


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DUBAI, United Arab Emirates — Economies from the Middle East and North Africa are likely to grow roughly twice as fast over the next two years as they did in 2009, but the region must do more to diversify its economies and create jobs, the International Monetary Fund said Sunday.

The Washington-based body forecasts the economy will grow by 4.2 percent this year and 4.8 percent next year in the 22-nation region stretching from North Africa through Pakistan.

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That compares with growth of 2.3 percent last year as the region struggled with lower oil revenues and other effects stemming from the global economic crisis.

Overall, the IMF said in its latest regional economic outlook that the Middle East and North Africa region is enjoying "a generally robust recovery" thanks to higher oil prices and government policies designed to mitigate the effects of the worldwide downturn.

Because of increased oil prices, the IMF estimates the Gulf states and other oil-exporting countries in the region will see their combined current-account surplus rise to $150 billion next year, up from just $70 billion last year, giving them more leeway to spend.

However, economic growth outside the energy sector remains sluggish. The IMF called on oil-exporting nations to reduce their dependance on crude by diversifying their economies and to tackle lingering problems uncovered by the financial crisis, such as the immense debt load carried by Dubai state-linked firms.

The region's generally poorer oil-importing countries — many of which depend on tourism, trade and worker remittances from their richer neighbors — are expected to see their economies grow 5 percent this year, up from 4.6 percent in 2009, the IMF said.

On a per capita basis, though, their growth significantly lags behind that of other parts of the developing world, the IMF said.

That presents major challenges in creating jobs for their young and fast-growing societies, where chronic unemployment averages about 11 percent.

Providing enough jobs for the oil-importing countries' unemployed and up-and-coming workers over the next decade would require growth of at least 6.5 percent, the IMF estimates. That, according to the IMF, means creating more than 18 million jobs just in the oil-poor parts of the Arab world alone.

The IMF report includes oil exporters Algeria, Bahrain, Iran, Iraq, Kuwait, Libya, Oman, Qatar, Saudi Arabia, Sudan, the United Arab Emirates and Yemen, and oil importers Afghanistan, Djibouti, Egypt, Jordan, Lebanon, Mauritania, Morocco, Pakistan, Syria and Tunisia.

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