São Paulo – The most recent World Economic Outlook (WEO) disclosed on Tuesday (21) by the International Monetary Fund (IMF) regarding the Middle East and North Africa makes an alert to the nations of the region: each country should work on macroeconomic policy reforms allowing for greater resistance to international crises and promoting growth independent from production of oil and gas.
The study shows that the countries of the Middle East and North Africa are divided into groups that develop at two speeds: with oil producers and exporters growing faster and in a more sustained manner. On the other hand, importers of the commodity are poorer and have more irregular growth.
In this edition of the WEO, however, the IMF affirms that the difference between growth of these nations in 2013 is lower as the importers of oil should grow a little more than in 2012. Exporters, in turn, should grow less due to the lower demand in European nations, which are living a crisis. However, exporters of oil should grow in 2013, sustaining the government spending and the non-oil sector.
“The exporters of oil, mainly those of the Gulf Cooperation Council (GCC) (which includes the United Arab Emirates, Saudi Arabia, Bahrain, Kuwait, Oman and Qatar), generally face a more favourable scenery. However, the global tendencies (for the economy) have worsened; exporters of oil will be confronted with great pressure. A prolonged decline in oil prices, based on persistent low economic activity, may consume reserves and result in fiscal deficits,” says the report.
The Fund study points out that most of the exporter countries have low public debt and that the non-oil sector, which grew 4% in 2012, is sustained by low global interest rates, population consumption and greater salaries of civil servants. However, the WEO points out that this year, the exporters of oil should not record a current account surplus of US$ 440 billion, like that obtained in 2012. The forecast is for the surplus this year to be US$ 370 billion, due to the lower price of oil on the futures market and to the reduction in exports.
The IMF recommends that oil exporter reduce spending, avoid increasing civil servant wages and promote reforms in the economy that allow them to use revenues from exports of oil in the benefit of future generations. It also recommends investment in the quality of education, as better educated workers can compete for private sector jobs.
Oil importers
The WEO points out that the Gross Domestic Product (GDP) of importers of oil grew on average 2.7% in 2012 and should grow approximately 3% this year. The report shows that the GDP of these countries grew last year boosted by a record crop in Afghanistan, the Mauritanian recovery from the 2011 drought and the Sudanese signing of security and oil exploration agreements with South Sudan. However, few jobs were created, mainly among women and youths. Afghanistan, Pakistan and Iran are not Arab, but are contemplated by the Fund’s study.
Another challenge faced by oil importers is the political transition that is taking place in many of these nations and the conflict in Syria, which may have repercussion in the neighbouring nations. In the evaluation of the WEO, Egypt, Morocco, Jordan and Tunisia are living political transitions. Yemen and Libya are also considered transitioning countries, but are oil exporters. Yemen, according to the IMF, should need another loan from the institution.
The WEO recommends that oil importers adopt difficult and “unpopular” measures to maintain economic stability. “It will be necessary to insist on structural reforms to deepen trade integration, to modernize rules, expand institutional reasonability, remove hardships to the opening and closing of companies, modify labour laws that provide incentives to the hiring of workers and projects them, aligned to education that supplies worker needs and expansion to the access to financing,” says the study.
The WEO estimates that the GDP of the countries of the Middle East and North Africa (excluding Pakistan, Afghanistan and Iran) should grow 3.1% and, in 2014, 3.7%. Among the exporters of oil, the GDP of Algeria should grow 3.3%; Bahrain, 4.2%; Iraq, 9%; Kuwait, 1.1%; Libya, 20.2%; Oman, 4.2%; Qatar, 5.2%; Saudi Arabia, 4.4%; the United Arab Emirates, 3.1%; and Yemen, 4.4%. Among the importers, the forecast is that the GDP of Djibouti should grow 5%; Egypt, 2%; Jordan, 3.3%; Lebanon, 2%; Mauritania, 5.9%; Morocco, 4.5%; Sudan, 1.2%; Tunisia, 4%; and Palestine, 5%. The WEO does not have forecasts for the economy of Syria.
*Translated by Mark Ament
