Years of war, refugee flight has wrecked ME economies: IMF

WASHINGTON: Middle East economies have plunged into decline in the years of war since the Arab Spring, creating daunting economic and development challenges, according to an IMF report released yesterday.

Nose-diving growth, soaring fiscal imbalances and decimated labor markets across the region call for newly concerted efforts from donor countries and coordination among humanitarian aid groups and development bodies, said the report, released ahead of a United Nations summit on the refugee crisis.

International Monetary Fund Managing Director Christine Lagarde said that, while the world’s attention had been drawn to the humanitarian impact of wars, economic disasters were also unfolding. “Much of the productive capital in conflict zones has been destroyed, personal wealth and income losses are enormous, and human capital deteriorates with the lack of jobs and education,” she wrote in a blog post accompanying the report. The UN General Assembly on Monday is due to hold a high-level summit to coordinate international responses to the refugee and migration crisis.

The IMF report followed Thursday’s release of World Bank research which said the burden of large numbers of refugees and displaced persons was largely borne on the shoulders of poor countries, a fact that likewise called for coordination between humanitarian and development aid policies. “To varying degrees, these countries face large numbers of refugees, weak confidence and security and declining social cohesion that undermines the quality of institutions and their ability to undertake muchneeded economic reforms,” the IMF report said. In a sobering analysis, it laid out the economic costs of war for countries both plagued by conflict or bordering countries that are.

• After four years of civil war, Syria’s GDP has fallen by more than half.

• Yemen’s economy contracted by 25-35 percent last year alone.

• Libya saw economic activity fall by 24 percent in 2014.

War damage to Syria’s physical capital amounts to $137.8 billion, or 230 percent of pre-war GDP, the report said, and, with 470,000 killed, 6.6 million displaced and 5 million having fled, the country has lost about 50 percent of its population. The strains on governance, state revenues and state institutions such as central banks are profound: Preliminary data indicate that Yemen, for example, missed its 2015 revenue targets by as much as 60 percent.