Elena Ianchovichina's blog
Will a return to political stability solve the economic problems in the Middle East and North Africa?
In the three years since the Arab Awakening of late 2010, the Middle East and North Africa (MENA) has seen an increase in conflict and political instability, on the one hand, and a deteriorating economic situation, on the other. Given the vicious cycle between economic hardship and conflict, it is natural to ask whether a return to political stability will restore prosperity in the region.
The topic of inclusive growth has captivated the minds of economists and politicians in the Middle East and North Africa for some time. The interest was there before the events of the Arab Spring and only intensified with the revolutions of 2011. But inclusive growth has eluded the countries of the MENA region.
Although regional economic activity is expected to accelerate in 2012, growth is expected to retreat slightly in 2013. The single biggest risk to this forecast is prolonged political and policy uncertainty, which is a key constraint to private investment and trade, particularly trade in services, while political and social unrest are serious downside risks to the outlook.
Our latest regional outlook shows a two-track path for growth in MENA. In 2012 oil exporters are likely to fare much better than oil importers in the Middle East and North Africa (MENA). Growth of MENA’s oil exporting countries will be strong and rise from the average of 3.4 percent in 2011 to 5.4 percent in 2012. The new Regional Economic Update presents the outlook for MENA in the context of rapidly-evolving global and domestic environments, recognizing the linkages that matter for shaping country-specific outlooks and the multiple risks that could alter them.
Last week I was in Abu Dhabi for the opening of the joint World Bank – Arab Monetary Fund course on policies for inclusive growth. The course was offered to mid- and high-level policy makers and government officials working in central banks and ministries of finance in sixteen Arab countries. After the opening remarks, I was scheduled to start the course with two lectures on economic trends and inclusive growth in the region. I looked forward to the opportunity to engage with a diverse group of Arab policy makers on a topic that is so relevant in the context of the events of the past year.
One of the key and long-lasting concerns across the Middle East and North Africa (MENA) region has been job creation. With the Arab spring events, this issue has moved to the top of the development policy agenda in most countries in the region. And the media has been reporting personal stories of hardships faced by people, especially young ones, trying to find jobs that match their aspirations, in some cases, qualifications, and enable them to launch their lives and start families. There is little doubt that the region needs more jobs.
There is widespread belief that consumers across Middle East and North Africa (MENA) are largely insulated from global food price increases due to government food consumption subsidies and other policies. This, perhaps, explains why prior to its April edition, the World Bank’s Food Price Watch and many papers written on the topic did not report changes in domestic food prices in any MENA country. Limited access to microeconomic data has been another reason for focusing mainly on the macroeconomic implications of food price shocks in the region. Still the absence of systematic monitoring of domestic food price movements and analysis of their implications for households in MENA are surprising.