By Sohaila Barghash
As the Middle East faces serious economic and social conflicts, many countries in the region are grappling with rising public debt.
Jihad Azour, the IMF’s director of the Middle East and Central Asia said, “Global developments are affecting the outlook for this year, namely the slowdown in growth especially on trade, the volatility in the oil price, as well as also the global financing conditions”.
Adding, “For oil-importing countries where debt is high, it’s very important to tackle it and to reduce the level of deficit. That will allow those countries to reduce their debt burden over GDP.”
Due to economic contraction in Iran, especially after the enforcement of US sanctions, growth for oil exporters is projected to dip slightly in 2019 to 0.4 percent, from 0.6 percent last year.
Therefore, the region’s oil-importing countries are expected to have a slowdown in growth, declining from 4.2 percent in 2018 to a projected 3.6 percent this year.
The IMF is suggesting that countries pursue and accelerate their diversification strategies while also maintaining their pace of fiscal adjustment that will allow them to reduce their dependence on oil revenues.
Other than oil prices, social tensions are bringing increasing concerns, the IMF said, the countries with social instability in the region will face challenges in marinating successful trade policies as well as medium-term growth.
In the past 18 months, counties in the Middle Eastern region have been highest in the IMF’s Reported Social Unrest Index, which calculates the share of articles in major news sources that include key terms relating to protests, demonstrations, and other forms of social unrest.
Economic factors almost always play a role in triggering social unrest, leading to protests, while unemployment rates rise in these countries, people and especially the youth are more prone to taking to the streets and raise their demands for reformation.
Azour said, “Going forward, it’s very important to keep focused on the right reforms that will allow those countries to improve growth, and allow the private sector to grow and create jobs. I think it’s a call for action for governments, as well as the private sector, to think more about how to bring growth up.”