David Lipton, first deputy Managing Director of the International Monetary Fund, had predicted, in November 2012, that major challenges lay ahead for recovery of Arab Nations in the Middle East, especially those countries that had experienced a regime change, referred to as ACT – Arab Countries in Transition. The biggest challenge to these economies was in creating gainful and sustainable employment for its’ rising disgruntled youth population. The reasons for this were multifactorial. Internal environments like lack of private sector growth, low economic diversification, lack of enhanced skills & meritocracy contributed to the risks. External environment like – the continuing civil war in Syria that has resulted in regional spill overs, increasing food & fuel prices globally, and deteriorating economic recession still pose challenges to these nations that have despite all odds, maintained macroeconomic stability.
Countries like Libya, Algeria according to recent research, have performed extremely well despite the political and economic challenges they have faced. Countries like UAE, Qatar, Saudi Arabia & Kuwait continued with their robust growth, enhancing the economic performance of the region. Forbes Middle East in this regard presented its latest study on the Best Performing Economies in the Arab World, produced with the cooperation of the International Monetary Fund (IMF). Initial research spanned 19 Arab countries, with a total of 17 included in the final study which was based on IMF data for the year 2012.
– Among Arab Spring hit countries Libya was the top performer
– Algeria attracted the most investments in the Arab region in 2012
– Saudi Arabia topped the list of revenue generation in 2012 with $355.32bn in total
– Libya recorded a remarkeable zero debt in 2012, while its GDP rose 121.9% to $33bn
– Lebanon suffered the highest debt level in 2012 which reached over 135% of GDP
The study brings to light positive transformation in oil-exporting countries including economic diversification and increased public spending on health, education and employment.
Findings also reveal the recovery of a number of the region’s economies affected by the Arab Spring, with Libya performing well on almost all counts.
Algeria topped the list of countries attracting investments in the Arab region in 2012. With an investments amounting to 38.11% of the country’s GDP per IMF figures, Algeria served itself well by opening the door to foreign investment in key productive sectors including energy and manufacturing.
Saudi Arabia outperformed its regional counterparts where revenues are concerned, with total government revenue amounting to $355.32bn in 2012, up from $318.19bn the year before, marking an 11.67% increase. In addition, oil revenues in the Kingdom rose by 6%, while the earnings of non-oil sectors increased by 11.24%.
Meanwhile, the UAE and Kuwait also recorded high revenues of $130.73bn and $120.12bn, respectively, and Egypt’s government revenues rose by 13.9% from $48.35bn in 2011 to $55.02bn in 2012.
As for government debt, post-revolution Libya made headlines recording zero debt while its GDP rose 121.9% from 2011 to 2012 reaching a figure of $33bn. In Jordan, debt as a percentage of national GDP stood at 75% last year, marking a 6.57% increase on 2011, while Lebanon suffered the highest debt level which reached over 135% of GDP.
Study findings also revealed Bahrain as home to the lowest inflation rate last year with growth of 0.59% compared to over 4.9% in Saudi Arabia. Qatar and the UAE registered low inflation rates too, while Yemen and Sudan recorded the highest rates due to political and economic instabilities.
This year, Syria has been excluded from the study due to the current political instabilities. Palestine also does not feature due the absence of relevant IMF data for this country. However, all efforts are on to revive these economies and help them attain stability and sustainability in the coming years.
Middle East Economic Imbalance
Here’s an interesting video where Masood Ahmed, Director, Middle East and Central Asia Department, IMF describes the divergent nature of the Middle Eastern economies; emphasizing that while most of the region’s oil-exporting countries are growing at healthy rates, the oil importers face subdued economic prospects.
According to Ahmed: “The immediate priority for the Arab countries in transition is how to balance the expectations of an impatient population that wants a transition dividend with the growing financial and economic constraints that have come from having used up their external reserves, facing a difficult international environment, ensuring macroeconomic stability over the next 18 months is a big challenge,” he said in November 2012.
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