The cost of Arab Spring turmoil to the economies of the Middle East and North Africa continues to rise while the gains from higher oil prices are diminishing, the International Monetary Fund (IMF) said on Tuesday as it lowered its forecast for gross domestic product growth in 2011 and 2012.
While the region’s economies will expand 4% this year — slightly less than the 4.1% the Washington DC-based organization had predicted in April — growth in the countries hardest hit by Arab Spring unrest will be considerably weaker. Egyptian GDP will grow at a quarter its 2010 pace, Syria’s economy will shrink and Tunisia’s will show nil growth.
While high oil prices continue to power the economies of the Gulf, they will begin feeling the impact of slower world demand for petroleum in 2012. GDP growth for oil exporters will slow from a projected 4.9% this year to 3.9% in 2012. As a result, GDP growth across all Middle East and North Africa (MENA) economies will decelerate to 3.6% next year, the IMF said.
The IMF warned that the situation may worsen amid a slowing world economy and continued political uncertainty in the region.
Farouk Soussa, chief Middle East economist at Citigroup, believed it remains premature to say how the economies hit by the Arab Spring will fare
“If you look at countries like Tunisia or Egypt or Bahrain, they’re still fairly unstable and therefore economic environment remains depressed. How it will develop depends on economic policy. There’s a big question mark on the extent of populism,” Soussa told The Media Line.
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