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Arab Spring economies hit by uncertainty: IMF

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The economies of Arab countries rocked by the uprisings that swept the region two years ago, remain sluggish because of unfinished political transitions

Egyptian toppled president Hosni Mubarak and his two sons Alaa (R) and Gamal stand behind bars during their trial at the Police Academy on September 14, 2013 in Cairo (AFP File Photo)

Egyptian toppled president Hosni Mubarak and his two sons Alaa (R) and Gamal stand behind bars during their trial at the Police Academy on September 14, 2013 in Cairo (AFP File Photo)

By Ali Khalil – AFP

The economies of Arab countries rocked by the uprisings that swept the region two years ago, remain sluggish because of unfinished political transitions, a top IMF official told AFP.

Others are suffering from the financial and social burdens imposed on them by a huge influx of refugees from the civil war in Syria, International Monetary Fund director for the Middle East and Central Asia Masood Ahmed said in an interview.

And overall, the difficulties are exacerbated by still weak global economic performance.

“The situation in Arab Spring nations has become more challenging over the past year,” Ahmed said.

The economies of Tunisia and Egypt have seen weak growth since the uprisings that ousted their longtime leaders in 2011.

Libya, the third country to overthrow its dictator, has seen its economy on a rollercoaster due to sharp fluctuations in oil production.

“The continued weak international environment, including virtually no growth in Europe, which is a major trading partner for some of these countries” is another factor, Ahmed said.

He said that the prolonged and difficult political transitions have added to uncertainty and led the private sector “to continue with the wait-and-see attitude.”

“The net result of this is that the private sector-led recovery which we were expecting to see this year has been delayed by another year,” he said.

An average growth rate of around three percent now is not enough to reverse unemployment, with some 1.5 million people joining the mass of jobless people over the past few years, he said.

It is also “too low to respond to the aspiration of an increasingly impatient population,” he said.

Ahmed was speaking in conjunction with publication of the IMF Regional Economic Outlook.

Tunisia’s gross domestic product grew by 3.6 percent in 2012 but is expected to slow down to 3 percent this year, before picking up to 3.7 percent in 2014, the outlook said.

The country has been struggling for months to form a technocratic government to take over from the Islamist-led cabinet, which has been widely blamed for the country’s persistent economic problems.

Growth in Egypt is also expected to slow, to 1.8 percent this year from the already weak rate of 2.2 percent in 2012, before picking up by 2.8 percent next year.

Egypt is heavily dependent on tourism, which has never fully recovered from the slump that befell it during the uprising against former president Hosni Mubarak at the beginning of 2011.

Oil-dependent Libya is now expected to experience a contraction of 5.1 percent this year due to disruption in oil production before returning to sharp growth of 25.5 percent in 2014.

That follows a whopping growth of 104.5 percent registered last year, more than compensating for the 62.1 percent plunge in 2011, the year veteran dictator Moamer Kadhafi was toppled.

Since this past summer, blockades of oil facilities by protesters demanding jobs and a redistribution of resources have brought oil production down to 250,000 barrels per day, from an expected 1.5 million bpd.

As for Syria, the IMF has stopped providing figures on the war-torn country.

“Regional conflicts and spillovers from them — particularly from Syria” — are major factors affecting economies, said Ahmed.

Lebanon and Jordan, both hosts to Syria refugees, are seeing modest rates of economic growth, as the two economies reel under the impact of hundreds of thousands of refugees from Syria.

Lebanon’s growth is seen at 1.5 percent this year and next, after an identical figure in 2012.

And Jordan is forecast to grow 3.3 percent this year and 3.5 percent in 2014, after a more modest 2.8 percent in 2012.

In addition to the huge refugees bill, there have been losses incurred in transit trade and tourism, Ahmed said.

“In all of these countries, what you are seeing is very modest rates of increase in economic activity which is effectively stagnating incomes and rising unemployment,” he said.

“Governments are having to manage a difficult set of pressures — social pressures as well as economic pressures at the time that their (fiscal) buffers are being depleted,” he said.

Ahmed said that governments in the Arab world and the rest of the world need to find a way to “arrest this situation with its downside risks and try to find ways to boost jobs and growth in the short term and lay the foundation for a private sector-led recovery.”


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