Regional Economic Outlook
Fall 2010
Tunisia
Lebanon
Morocco
Syria
Iran
Iraq
Jordan
Algeria
Libya
Egypt
Kuwait
Saudi Arabia
Bahrain
Qatar
Mauritania
Yemen
Sudan
Djibouti
Afghanistan
Pakistan
United Arab Emirates
Oman
Global outlook: Two-speed recovery in motion
Real GDP Growth
(percent change from a year earlier)
Emerging economies
Temporary slow-down
2010:H2 — 2011:H1
World
Advanced
economies
2000
02
04
06
08
10
A closer look at the two-speed recovery
Real GDP Growth
(percent change from a year earlier)
3
Rebalancing is needed along two dimensions
Demand from external
surplus economies
Private
demand
Demand from
external deficit
economies
Public
demand
4
Downside risks remain, but global double-dip unlikely
Prospects for World GDP Growth
(percent change)
5
Inflationary pressures are forecast to remain subdued
Core Inflation
(Twelve-month change in the core CPI)
For countries with a peg to
the USD or euro, this
means that higher inflation
rates may lead to real
appreciation.
2002
04
06
08
Jul.
10
6
Oil Demand Growth
(contributions to y-o-y growth in percent)
Total
demand
7
Temporary Wheat Supply Shock, Limited Spillovers
Major Food Crops, Nearest Futures Prices
(index, Jul. 1, 2010 = 100)
Wheat
Corn
8
Capital Flows, Reserves, Appreciation
Net Monthly Flows to Emerging Market
Equity Funds
Net Monthly Flows to Emerging Market
Bond Funds
(billions of U.S. dollars)
(billions of U.S. dollars)
Sep. 10
Sep. 10
9
MENAP Oil Exporters
Iran
Iraq
Kuwait
Algeria
Saudi Arabia
Bahrain
Libya
Qatar
Sudan
Yemen
United Arab Emirates
Oman
Overview — Oil Exporters
Recovery
continues
Risks/medium
term challenges
• Oil production picks up, fiscal/external balances improve
• But private sector is lagging
• Fiscal space allowing continued stimulus in some countries
• Keep eye on inflation
• Financial sector development and stability
• Reorienting spending, reducing reliance on oil revenues
Global demand recovers, boosts activity
Sources: National authorities; and IMF staff estimates.
MENAP Oil Exporters
…and external balances rebound
30
25
Current account balances; percent of GDP and billions of US dollars
GCC
$257
Algeria, Iran, Iraq, Libya
20
Sudan, Yemen
15
$107
$75
10
$124
$101
$31
$23
5
$5
0
-5
-10
-$7
-$7
-$6
-$10
-15
2008
2009
2010
2011
Sources: National authorities; and IMF staff estimates.
MENAP Oil Exporters
…as do fiscal balances
30
Fiscal balances; percent of GDP
25
GCC
20
Algeria, Iran, Iraq, Libya
15
Sudan, Yemen
10
5
0
-5
-10
-15
2008
2009
2010
2011
Sources: National authorities; and IMF staff estimates.
MENAP Oil Exporters
Many countries approaching break-even prices
160
SDN
140
YMN
Break-even Price for Fiscal balance
120
ALG
100
BHR
SAU
80
KWT
60
LBY
IRQ
IRN
UAE
OMN
Average oil price
in 2010
40
QAT
20
0
0
20
40
60
80
100
120
Break-even Price for Current account
Sources: National authorities; and IMF staff estimates.
MENAP Oil Exporters
Some countries continue to provide stimulus
Percent change in total government expenditures in U.S. dollars
(From 2008 to 2011)
Sources: National authorities; and IMF staff estimates.
MENAP Oil Exporters
Keep an eye on inflation
20
Consumer price index; annual percentage change
15
10
5
0
-5
-10
Aug-09
Other oil exporters¹
QAT
IRN
SAU
SDN
YMN
Nov-09
Feb-10
May-10
Aug-10
Source: National authorities.
1Algeria, Bahrain, Iraq, Kuwait, Libya, and Oman
MENAP Oil Exporters
Financial sectors after the crisis (December 2009)
25
Capital adequacy ratio
(Percent of risk-weighted assets)
ALG
BHR
20
UAE
KWT
QAT
15
SAU
OMN
10
YMN
LBY
Financial
sector
strength
5
IRN¹
SDN
0
0
5
10
15
Nonperforming loans (Percent of total loans)
20
25
Source: National authorities.
1December 2008
MENAP Oil Exporters
Diversification
Financial
market
development
Managing
international
financial linkages
MENAP Oil Exporters
MENAP Oil Importers
Tunisia
Morocco
Lebanon
Syria
Afghanistan
Jordan
Egypt
Mauritania
Djibouti
Pakistan
Overview — Oil Importers
• Growth picking up
Recovery
Policy
adjustment
Medium
term
challenges
• Can start consolidating fiscal positions
• In most cases, inflation not an immediate concern
• More than 18 million new jobs required by 2020
• Need to improve competitiveness and reorient trade
Trade recovery is moving ahead
Annual percent change of U.S. dollar value, 3-month moving average
60
Region’s
exports are
again
growing
steadily
40
20
0
European Union: imports
-20
MENAP oil importers:¹ exports
Emerging and devel. economies: exports
-40
Jun-06 Dec-06 Jun-07 Dec-07 Jun-08 Dec-08 Jun-09 Dec-09 Jun-10
Sources: National authorities; IMF Direction of Trade Statistics; and Haver Analytics.
¹ Egypt, Jordan, Lebanon, Morocco, Pakistan, and Tunisia.
MENAP Oil Importers
Real GDP picking up across region
Annual percentage change
10
China
9
India
8
7
AFG
EM Total
6
5
4
3
EGY
MRT
TUN
MAR
SYR
DJI
LBN
JOR
PAK
2
1
0
2011
Source: National Authorities; and IMF staff estimates.
MENAP Oil Importers
Progress in fiscal consolidation
Public debt (Percent of GDP)
90
MRT
80
2010
EGY
2011
70
JOR
DJI
PAK
60
Fiscal
consolidation
50
MAR
TUN
40
EM average
30
SYR
20
-10
-8
-6
-4
Fiscal balance (Percent of GDP)
-2
0
Source: National Authorities; and IMF staff estimates and projections.
MENAP Oil Importers
Most can maintain current monetary stance
Consumer Prices; annual percentage change
6
5
AFG
4
DJI
TUN
3
JOR
LBN
2
1
MAR
0
Aug-10
Sources: Haver Analytics; and national authorities.
MENAP Oil Importers
More than 18 million jobs needed
Dominique StraussKahn:
“We must not
underestimate the
daunting prospects
we face: a lost
generation,
disconnected from
the labor market,
with a progressive
loss of skills and
motivation.”
AFP/ABDELHAK SENNA/Getty Images. Reprinted with permission.
(Unemployed workers wait for a job in the Bani Makada quarter of Tangiers, Morocco on March 20, 2004.)
MENAP Oil Importers
High unemployment a long-standing issue
23
MENA6
Youth unemployment (Percent)
21
19
17
Central and
South-Eastern
Europe (nonEU) and CIS
South-East
Asia and the
Pacific
15
Latin America
13
Developed
Economies
World
Sub-Saharan
Africa
11
South Asia
9
East Asia
7
5
4
6
8
10
Total unemployment rate (Percent)
Sources: National authorities; IMF, World Economic Outlook; staff estimates; and International Labor Organization.
Note: MENA6 refers to Egypt, Jordan, Lebanon, Morocco, Syria, and Tunisia. Youth unemployment estimate for MENA6
excludes Jordan. Data refers to 2008 or latest available year.
MENAP Oil Importers
Growth and export gaps: getting bigger
35
10
Emerging and developing
economies
Real GDP per capita
(average annual growth rate, 1990–2009)
China
30
8
Emerging
Asia
25
6
LBN
4
20
India
TUN
JOR
MAR
PAK
2
MRT
15
MENAP oil importers
EM total
EGY
10
SYR
5
0
-5
0
5
10
15
1990
1995
2000
2005
2010
-2
Volume of exports of goods and services per capita
(average annual growth rate, 1990–2009)
Goods exports
(in percent of GDP)
Source: IMF, World Economic Outlook.
MENAP Oil Importers
Competitiveness will need to improve
Competitiveness Rankings, 2010–11¹
MENAP oil importers
Emerging Asia
Market size
100
Institutions
Inf rastructure
75
Technological
readiness
Macroeconomic
stability
50
25
Business
sophistication
Health and
primary
education
0 Best
Higher
education and
training
Innovation
Financial
market
sophistication
Goods market
ef f iciency
Labor market
ef f iciency
Source: World Economic Forum, Global Competitiveness Report, 2010–11.
¹Economies are ranked from 1 to 139, with first place being the best.
MENAP oil importers is a simple average of Egypt, Jordan, Lebanon, Mauritania, Morocco, Pakistan, Syria, and Tunisia. Emerging Asia is simple
average of China, Hong Kong SAR, India, Indonesia, Korea, Malaysia, the Philippines, Singapore, Taiwan Province of China, Thailand, and Vietnam.
MENAP Oil Importers
Broader Partnerships
Real GDP trends, annual percent change
Asia
Latin
America
Advanced
economies
1980
85
90
95
2000
05
10
15
Source: IMF, World Economic Outlook database.
Note: 1980-2015 real GDP growth data are de-trended as 10-year backward rolling averages.
MENAP Oil Importers
Labor market
flexibility
Education
Jobs and
Growth
Competitiveness
Reorient exports
toward new growth
engines
MENAP Oil Importers