Arab Spring economies to re­cover slowly: IMF

The Pak Banker - - Front Page -

DUBAI

Most economies hit by the Arab Spring up­ris­ings will re­cover slowly next year, grap­pling with high in­fla­tion and ris­ing un­em­ploy­ment due to poor global con­di­tions, the In­ter­na­tional Mone­tary Fund pre­dicted in a re­port on Sun­day.

In its twiceyearly out­look for the Mid­dle East and North Africa, the global lender said a par­tial re­turn of po­lit­i­cal sta­bil­ity could per­mit some­what faster growth in the com­bined out­put of Egypt, Jor­dan, Morocco, Libya, Tu­nisia and Ye­men dur­ing 2013.

But weak de­mand in Europe and other re­gions will weigh on the Arab Spring states, it said. In many of those coun­tries, ex­ports are shrink­ing and have not yet bot­tomed out, it added. “Growth is expected to re­main be­low longterm trends, and un­em­ploy­ment is expected to in­crease ow­ing t o con­tin­ued anaemic ex­ter­nal de­mand, high food and fuel com­mod­ity prices, re­gional ten­sions and pol­icy un­cer­tainty.”

The IMF fore­cast gross do­mes­tic prod­uct in the six coun­tries com­bined would ex­pand by 3.6 per­cent next year, ac­cel­er­at­ing from an es­ti­mated 2.0 per­cent this year and 1.2 per­cent in 2011. In 2010, the year be­fore the up­ris­ings, GDP grew 4.7 per­cent.

Be­cause of slug­gish global de­mand, the group’s cur­rent ac­count bal­ance of trade in goods and ser­vices will im­prove only marginally next year, to a deficit of 4.6 per­cent of GDP from this year’s 5.4 per­cent deficit, the IMF pre­dicted. It sug­gested some coun­tries should con­sider al­low­ing greater flex­i­bil­ity in their ex­change rates - code for per­mit­ting their cur­ren­cies to de­pre­ci­ate - in or­der to stim­u­late ex­ports, but did not spec­ify which coun­tries.

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