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IMF / MIDDLE EAST ECONOMIC OUTLOOK
STORY: IMF / MIDDLE EAST ECONOMIC OUTLOOK
TRT: 3.14
SOURCE: IMF
RESTRICTIONS: NONE
LANGUAGE: ENGLISH / NATS
DATELINE: 22 OCTOBER 2010, WASHINGTON DC
FILE / RECENT, WASHINGTON, DC
1. Wide shot, exterior IMF
22 OCTOBER 2010, WASHINGTON DC
2. SOUNDBITE (English) Masood Ahmed, Director Middle East and Central Asia Department, IMF:
“The key challenge for the emerging markets of the Middle East and North Africa is to reduce their unemployment. And to do this they have to tap into their growth potential, they have to grow at about two percent a year faster than they’ve been growing in the past. And that, in turn, requires improving their competitiveness, building links with trading partners that are themselves growing faster, and looking at inefficiencies and rigidities in their own labor markets.”
FILE / RECENT, BALTIMORE, MD
3. Various shots, Port of Baltimore
22 OCTOBER 2010, WASHINGTON DC
4. SOUNDBITE: (English) Masood Ahmed, Director Middle East and Central Asia Department, IMF:
“Countries of the Middle East and North Africa have traditionally traded with Europe; they’ve traded with North America. These parts of the world will still be important but they’re going to be growing much more slowly that they have been in the past. And that means that for the Middle East and North Africa they have to find also new partners in faster growing parts of the world, particularly Asia.
Some of this has already begun to happen, but so far that trade has been mostly raw materials from the Middle East in exchange for finished products from Asia. And now the key is going to be to see if the countries of the Middle East can tap into the global supply chain in a way that they can also be producing and exporting higher value added products.”
FILE / RECENT, SHANGHAI, CHINA
5. Various shots, people shopping
22 OCTOBER 2010, WASHINGTON DC
6. SOUNDBITE (English) Masood Ahmed, Director Middle East and Central Asia Department, IMF:
“To start off with improving competitiveness in the Middle East and North Africa is to look at some of the very burdensome regulations for starting businesses, it’s to look at inefficiencies and rigidities in labor markets, and it’s to look at the role of the public sector. The public sector attracts some of the best talent in these countries but it also sets a minimum floor on wages which sometimes makes it harder for the private sector to compete. And also the educational and curriculum in these countries has traditionally produced graduates well suited for the public sector now need to change in a way that they can also deliver on the jobs in the private sector in a different kind of skill set.”
FILE / RECENT, UNITED ARAB EMIRATES – RECENT
7. Various shots, university students in campus
22 OCTOBER 2010, WASHINGTON DC
8. SOUNDBITE (English) Masood Ahmed, Director Middle East and Central Asia Department, IMF:
“In many of the oil exporting countries, particularly in the GCC, the banks entered this financial crisis with strong positions. And that helped them to deal with the impact of the global slowdown, particularly on real estate and asset prices in the GCC countries. Of course, this has meant that the -- strain some of the balance sheets of some of the banks but the governments took strong decisive action, and as a result, while there is still a challenge to deepen the financial sector in these countries, in general the banks remain solid and well performing.”
FILE / RECENT, WASHINGTON, DC
9. Wide shot, exterior IMF
The Middle East and North Africa (MENAP) region is experiencing a robust recovery, aided by rising oil prices and higher oil production levels, a new IMF report says.
The IMF’s Regional Economic Outlook for the Middle East and Central Asia, released October 24, says the MENAP region’s output is projected to expand by some 4.2 percent in 2010, up from 2.3 percent in 2009.
““The key challenge for the emerging markets of the Middle East and North Africa is to reduce their unemployment. And to do this they have to tap into their growth potential, they have to grow at about two percent a year faster than they’ve been growing in the past. And that, in turn, requires improving their competitiveness, building links with trading partners that are themselves growing faster, and looking at inefficiencies and rigidities in their own labor markets,” IMF Middle East and Central Asia Director Masood Ahmed said.
The region’s oil importers, Afghanistan, Djibouti, Egypt, Jordan, Lebanon, Mauritania, Morocco, Pakistan, Syria, and Tunisia, have moderately strengthened in 2010, with the exception of Pakistan, which was hit by devastating floods in mid-2010. Oil importers as a whole are projected to grow 5 percent in 2010, up from 4.6 percent in 2009.
In light of stronger growth, the region’s governments are resuming efforts to strengthen public finances, the report noted. While public debt levels in most MENAP oil-importing countries are higher than the emerging-market average, improvements in fiscal positions in run-up to the global crisis gave room for stimulus that limited the fallout in 2008–09. With the resumption of fiscal consolidation, government deficits are projected to narrow in 2011 in most countries.
The region’s trading patterns remain oriented mainly toward Europe, and there has been relatively little change in the product mix. Although there has been some diversification of trade links, the region has benefited relatively little from the expansion of Asian and Latin American powerhouses, which contribute close to half of global GDP growth, but account for only about 9 percent of the region’s total exports.
“Countries of the Middle East and North Africa have traditionally traded with Europe; they’ve traded with North America. These parts of the world will still be important but they’re going to be growing much more slowly that they have been in the past. And that means that for the Middle East and North Africa they have to find also new partners in faster growing parts of the world, particularly Asia. Some of this has already begun to happen, but so far that trade has been mostly raw materials from the Middle East in exchange for finished products from Asia. And now the key is going to be to see if the countries of the Middle East can tap into the global supply chain in a way that they can also be producing and exporting higher value added products,” Ahmed said.
MENAP oil importers, many of which face burdensome regulatory systems, weak institutions, and a dominating public sector, have much to accomplish to become competitive relative to other more dynamic economies. Sound macroeconomic policies -in particular, fiscal consolidation- will help support competitiveness, but governments will also need to make greater efforts to improve the business climate.
“To start off with improving competitiveness in the Middle East and North Africa is to look at some of the very burdensome regulations for starting businesses, it’s to look at inefficiencies and rigidities in labor markets, and it’s to look at the role of the public sector. The public sector attracts some of the best talent in these countries but it also sets a minimum floor on wages which sometimes makes it harder for the private sector to compete. And also the educational and curriculum in these countries has traditionally produced graduates well suited for the public sector now need to change in a way that they can also deliver on the jobs in the private sector in a different kind of skill set,” Ahmed said.
For the MENAP oil exporters, Algeria, Bahrain, Iran, Iraq, Kuwait, Libya, Oman, Qatar, Saudi Arabia, Sudan, the United Arab Emirates, and Yemen, economic activity is picking up considerably. With the rebound in worldwide demand, crude oil production is projected to grow to 25 million barrels per day (bpd) in 2010 and 26 million bpd in 2011. As a result, oil GDP will register growth rates of 3.5 percent in 2010 and 4.3 percent in 2011.
The rise in oil prices, by 23 percent in 2010 and more than 3 percent in 2011, is also leading to a marked turnaround in external balances. The combined current account surplus of these countries is projected to rise by about $80 billion on current oil price expectations; of this, close to $50 billion is accounted for by the countries of the Gulf Cooperation Council.
For the GCC, the challenge is to consolidate the gains made in the past, address any remaining vulnerabilities uncovered by the crisis, and pursue regulatory and supervisory reform in line with evolving international norms. For some other oil exporters in the region, the challenge is to spur greater financial development by removing entry and exit barriers and reducing state ownership in the banking system.
“In many of the oil exporting countries, particularly in the GCC, the banks entered this financial crisis with strong positions. And that helped them to deal with the impact of the global slowdown, particularly on real estate and asset prices in the GCC countries. Of course, this has meant that the -- strain some of the balance sheets of some of the banks but the governments took strong decisive action, and as a result, while there is still a challenge to deepen the financial sector in these countries, in general the banks remain solid and well performing,” Ahmed said.
Non-oil activity is also projected to pick up, but more gradually by only 1 percentage point between 2009 and 2011, the IMF report said. In most countries, non-oil-sector growth continues to rely on supportive fiscal policy with private financing and credit still sluggish. Unlike some other regions, capital inflows have so far shown only a small resurgence in the MENAP oil exporters.
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