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Economic Fallout from the Arab
- 1. Economic Fallout fromthe Arab Spring Mohsin Khan Rafik Hariri Center for the Middle East 1
- 2. Outline 2 Economic developmentssince the 2011 uprisings Economic policies Role of the international community and the IMF What lies ahead?
- 3. Effects of Domesticand External Shocks— Perfect Storm 3 Growth falling Unemployment rising Regional spillovers Social unrest Political change High oil prices Slow global growth European turmoil
- 4. Economic Growth: MENAand Arab Transition Countries 2000-2014 (percent) 4 0 1 2 3 4 5 6 2000-2010 2011 2012 2013 2014 Arab Transition Countries (excluding Libya) MENA
- 5. Real GDP Growthand Inflation 2010-2014 5 Real GDP (percent) Inflation (percent) 2010 2011 2012 2013 2014 2010 2011 2012 2013 2014 Egypt 5.1 1.8 2.2 2.2 2.5 11.2 10.0 7.1 9.5 10.1 Jordan 2.3 2.6 2.7 2.8 3.1 5.0 4.4 4.6 5.6 3.0 Libya 5.0 -62.1 104.5 -13.6 -22.9 2.5 16.0 6.1 2.6 3.0 Morocco 3.6 5.0 2.7 4.4 2.9 1.0 0.9 1.3 2.0 0.5 Tunisia 2.9 -1.9 3.7 2.3 2.8 4.4 3.5 5.6 6.1 5.5 Yemen 7.7 -12.7 2.4 4.8 0.3 11.2 19.5 9.9 11.0 9.0 MENA 5.5 3.9 4.6 2.1 2.6 6.6 9.4 10.4 6.8 6.5
- 6. Unemployment 6 0 5 10 15 20 25 30 35 40 45 Egypt Jordan LibyaMorocco Tunisia Yemen UnemploymentRate(%) 2011 2012 2013
- 7. Economic Policies 7 Preoccupationwith political issues No economic model – unlike European transition countries Day-to-day management of the economy – reactive economic policies Populist policies – subsidies, government employment, wage increases, expansionary fiscal policies
- 8. Fiscal Balance 2010-2014 (percentof GDP) 8 2010 2011 2012 2013 2014 Egypt -8.3 -9.8 -10.5 -14.1 -13.6 Jordan -5.6 -5.7 -8.9 -11.1 -10.8 Libya 15.9 -9.0 25.9 -4.0 -43.3 Morocco -4.4 -6.7 -7.3 -5.2 -5.0 Tunisia -0.4 -3.0 -4.7 -6.0 -4.3 Yemen -4.0 -4.4 -6.4 -6.9 -5.4
- 9. Role of theInternational Community 9 Deauville Partnership (May 2011) – promised $40 billion US/EU – provided very limited financing Gulf countries – substantial bilateral financing, particularly to Egypt IFIs – IMF, World Bank, EBRD, African Development Bank, Islamic Development Bank
- 10. IMF Programs 10 Jordan(2012): 3-year SBA for $2 billion Morocco (2012): 2-year PLL for $6.21 billion; followed by another 2-year PLL (2014) for $5 billion Tunisia (2013): 22-month SBA for $1.78 billion; negotiations for a 4-year EFF (2016) for $2.8 billion Yemen (2012): RCF emergency loan for $100 million; followed by a 3-year ECF (2014) for $553 million Egypt (proposals): SBA for $3 billion negotiated in 2011; SBA for $4.8 billion negotiated in 2013
- 11. Business Climate Rankings 11 CountryWorld Bank World Economic Forum Heritage Foundation Egypt 131 116 125 Jordan 113 64 46 Libya 188 -- --- Morocco 75 72 85 Tunisia 74 92 114 Yemen 170 -- -- Total Countries 189 140 178
- 12. Economic reforms needed 12 Rationalizing the subsidies system Reducing government employment Streamlining business and investment regulations Revising bankruptcy procedures Advancing privatization Modifying labor laws and regulations Expanding education and vocational training Implementing financial sector reforms Assisting SMEs to access bank credit Promoting PPPs to develop infrastructure
- 13. Economic Growth 2015-2016 13 20152016 Egypt 4.2 4.0 Jordan 2.5 3.0 Libya -6.1 -- Morocco 4.4 3.1 Tunisia 0.8 3.0 Yemen -28.1 --
- 14. Combining austerity withgrowth 14 Macroeconomic stabilization Public finances External balances and foreign exchange reserves Increasing capacity utilization in industries Structural reforms to create dynamic economies Create jobs Generate domestic and foreign investment Compete in a globalized world