Economic activity for oil importing countries’ in the MENAP region (Middle East, North Africa, Pakistan and Afghanistan) is expected to increase by 4% in 2015, according to a report released Tuesday by the International Monetary Fund (IMF).
The IMF report, entitled “Regional Economic Outlook: Middle East & Central Asia”, said the growth rate comes after a dull performance as it remained at 3% this year.
The countries have been resisting growth due to socio-political issues and conflicts arising in the region. However, a gradual advancement in supporting domestic demand is expected as political problems decrease. Unemployment is not expected to decrease, however.
The report added that some oil importers, including Egypt, are beginning to control their high budget deficits which will increase their strength and resilience against shocks. In Egypt and other neighbouring countries, including Jordan, Sudan, Tunisia and Morocco, the target was mainly to use their savings to protect the poor and provide growth in healthcare, education and better infrastructures. Countries are also using some of their savings gained from subsidies to control monetary deficits.
However, the debt-to-GDP ratio in MENAP region oil importing countries is still increasing, adding to which the upcoming year’s needs for gross external financing is expected to reach $100bn.
The expected increase in growth next year will, it is hoped, lead to a gradual decrease in budget deficits, aiding MENAP countries to maintain more confidence and economic resilience.
The report added the probability of regional medium term growth has witnessed rapid decline compared to other regions globally, making it harder to recover from unemployment “especially among women and the youth”. The main reasons behind this decline are: “Structural rigidities, lack of openness to trade and competition, and institutional weaknesses.”
In order to recover gradually from the declining growth issue, international support will be needed from other countries. The IMF mentioned that support can be through “scaled-up financing, enhanced trade access, policy advice, and capacity building”.
In September 2014, Minister of Industry and Foreign Trade Mounir Fakhry Abdel Nour said the Egyptian government will perform economic consultations with the IMF to open new paths for cooperation with the organisation. Advisor to US Secretary of State David Thorne, added that the World Bank and IMF are hoping to backup Egypt, and that they are following up on the country’s economic developments.