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IMF / MIDDLE EAST ECONOMIC OUTLOOK
STORY: IMF / MIDDLE EAST ECONOMIC OUTLOOK
TRT: 2.53
SOURCE: IMF
RESTRICTIONS: NONE
LANGUAGE: ENGLISH / NATS
DATELINE: 6 MAY 2014, WASHINGTON DC / FILE
RECENT – SHARJAH, UNITED ARAB EMIRATES
1. Various shots, American University of Sharjah
6 MAY 2014, WASHINGTON DC
2. SOUNDBITE (English) Masood Ahmed, Director, Middle East Department, IMF:
“The oil exporting countries of the region: they are going through another year of relatively robust growth, if you look at their non-oil parts of those economies, and that's important, because that is where jobs are mostly created. This year the non-oil economy in the oil exporters is going to grow at about four percent for the GCC countries, which are the countries of the Gulf Corporation Counsel, their non-oil economies might grow as much as six percent this year.”
RECENT - CAIRO, EGYPT
3. Various shots, students
6 MAY 2014, WASHINGTON DC
4. SOUNDBITE (English) Masood Ahmed, Director, Middle East Department, IMF:
“If you look at the oil importing countries this is the countries some of which are in crisis, some of which are in political transition, this group of countries is going to have another year of relatively modest growth about three percent. You see some improvement compared to the last two years, in terms of the international environment, Europe in particular is doing a little bit better than it has been for the past two years, but the recover's still fragile. The growth rate is still too low for them to generate the kinds of jobs they need, so the challenge for this group of countries is how to build on the stabilization they have had and how to go to higher and more job creating growth.”
RECENT - CAIRO, EGYPT
5. Various shots, people walking down street
6 MAY 2014, WASHINGTON DC
6. SOUNDBITE (English) Masood Ahmed, Director, Middle East Department, IMF:
“Many of the people coming out of schools and universities in the region actually have difficulty matching jobs that area available because their skills are not geared to what the private sector requires. So a new economic model that is more job creating, more inclusive and one that people will see as being fairer, because fairness is one of the issues that was driving many of the people to come out on the streets 3 years ago.”
RECENT - CAIRO, EGYPT
7. Various shots, people walking down street
6 MAY 2014, WASHINGTON DC
8. SOUNDBITE (English) Masood Ahmed, Director, Middle East Department, IMF:
“In all of these programs, we have adapted the program at the start, to make it gradual so that the pace of reform is something that is consistent with the social and political tension, and when these countries have experienced shocks for example, in the case of Jordan, after the program that they embarked on two years ago started, there was the additional shock of Syrian refugees, which has had a big impact on Jordanian economy. We have adapted the program targets to take into account the consequence of these shocks.”
RECENT - AMMAN, JORDAN
9. Wide shot, skyline
Economic growth in the Middle East, North Africa, Afghanistan, and Pakistan is expected to strengthen this year, but weak confidence and, in some cases, large public deficits continue to pose risks to this outlook, the IMF said in its latest regional assessment.
The IMF projects that growth in the region will average about 3¼ percent in 2014 as global conditions improve.
The IMF expects growth in the region’s oil exporters—Algeria, Bahrain, Iran, Iraq, Kuwait, Libya, Oman, Qatar, Saudi Arabia, the United Arab Emirates, and Yemen—to strengthen to 3½ percent this year from 2 percent in 2013.
Higher production in Iraq and countries of the Gulf Cooperation Council (GCC) amid strengthening global demand will offset oil disruptions in Libya. Robust non-oil growth will continue owing to high public spending and strong private credit, the report says. Lower global demand—from slower growth in emerging markets or lower inflation in advanced economies—or rising oil supply from unconventional sources (shale gas) could reduce oil prices, however.
“The oil exporting countries of the region: they are going through another year of relatively robust growth, if you look at their non-oil parts of those economies, and that's important, because that is where jobs are mostly created. This year the non-oil economy in the oil exporters is going to grow at about four percent for the GCC countries, which are the countries of the Gulf Corporation Counsel, their non-oil economies might grow as much as six percent this year,” said Masood Ahmed, Director of the IMF’s Middle East Department.
The IMF cautioned that fiscal positions in this group of countries are eroding. All non-GCC oil exporters (for example, Algeria, Iran, and Iraq) and two GCC countries (Bahrain and Oman) will run fiscal deficits this year, which makes them increasingly vulnerable to a sustained decline in oil revenues (chart 1). In addition, most oil exporters do not save enough of their oil windfalls for future generations, says the report.
Despite some positive signs—rising public investment and strengthening exports due to improved global growth, especially in Europe—the region’s oil-importing countries—Afghanistan, Djibouti, Egypt, Jordan, Lebanon, Mauritania, Morocco, Pakistan, Sudan, and Tunisia, as a group—will see another year of tepid economic activity (chart 2), the report says.
“If you look at the oil importing countries this is the countries some of which are in crisis, some of which are in political transition, this group of countries is going to have another year of relatively modest growth about three percent. You see some improvement compared to the last two years, in terms of the international environment, Europe in particular is doing a little bit better than it has been for the past two years, but the recover's still fragile. The growth rate is still too low for them to generate the kinds of jobs they need, so the challenge for this group of countries is how to build on the stabilization they have had and how to go to higher and more job creating growth,” Ahmed said.
The main reason for this low growth is weak confidence amid on-going complex political transitions and regional spillovers from Syria’s devastating civil war which is already having a major impact on Jordan, Lebanon, and Iraq. Resulting policy uncertainty, security tensions and social unrest also continue to hold back private investment, says IMF.
At 13 percent, the unemployment rate in the Arab Countries in Transition—Egypt, Jordan, Libya, Morocco, Tunisia, and Yemen—provides a stark contrast to the aspirations of the people that took to the streets partly in pursuit of better access to economic opportunity.
“Many of the people coming out of schools and universities in the region actually have difficulty matching jobs that area available because their skills are not geared to what the private sector requires. So a new economic model that is more job creating, more inclusive and one that people will see as being fairer, because fairness is one of the issues that was driving many of the people to come out on the streets 3 years ago,” Ahmed said.
Ahmed said that the IMF currently has financing programs with Morocco, Jordan and Tunisia.
“In all of these programs, we have adapted the program at the start, to make it gradual so that the pace of reform is something that is consistent with the social and political tension, and when these countries have experienced shocks for example, in the case of Jordan, after the program that they embarked on two years ago started, there was the additional shock of Syrian refugees, which has had a big impact on Jordanian economy. We have adapted the program targets to take into account the consequence of these shocks.”
Ahmed added that the IMF has worked to tailor each program in recognition of the political and social context in each country.
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