Arab Spring economies recover slowly in 2013

Arab Spring economies recover slowly in 2013

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.

November 11, 2012 9:58 by Reuters

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 twice-yearly 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 long-term trends, and unemployment is expected to increase owing to 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.

Weaker currencies could fuel inflation, which the IMF forecast would rise to 8.6 percent for the group next year, the highest level since 2008, from 7.8 percent this year.

Inflation is expected to rise in Egypt and Morocco as they try to curb their large budget deficits by scaling back food and fuel subsidies, the IMF said.