## MENAP Regional Economic Outlook May 2, 2017

## Source details

**Canonical URL:** [MENAP Regional Economic Outlook May 2, 2017](https://www.imf.org/-/media/files/publications/reo/mcd-cca/2017/may/pdf/menap0517p.pdf)

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- [Markdown version](/-/media/files/publications/reo/mcd-cca/2017/may/pdf/menap0517p.pdf.md)
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### The Global Context and Outlook
- Global growth is gaining momentum, with headline growth rates reported as:
  - 2016: World 3.1, U.S. 1.6, Euro 1.8, Emerging 4.1, China 6.7, Russia -0.2
  - 2017: World 3.5, U.S. 2.3, Euro 1.7, Emerging 4.5, China 6.6, Russia 1.4
  - 2018: World 3.6, U.S. 2.5, Euro 1.6, Emerging 4.8, China 6.2, Russia 1.4
- Commodity prices have strengthened but uncertainty remains high:
  - Commodity price indices are shown with 2005=100 base for Crude Oil (petroleum)1/, Metals2/, and Agricultural Products3/.
  - Confidence intervals (50 percent, 70 percent, 90 percent) indicate forecast uncertainty through 2018.
  - Footnotes in source: 1 Simple average of three spot prices; Dated Brent, West Texas Intermediate, and the Dubai Fateh. 2 Includes Copper, Aluminum, Iron Ore, Tin, Nickel, Zinc, Lead, and Uranium Price Indices. 3 Includes Timber, Cotton, Wool, Rubber, and Hides Price Indices.
- Global financial environment: existing stocks and new debt flows complicate global financial conditions for MENAP countries (charts show differing debt and interest payment pressures for MENAP Oil Importers and MENAP Oil Exporters).

### Regional Outlook for MENAP
- Growth and inflation:
  - Some pick-up in underlying growth but medium-term prospects remain subdued (charts compare Total, Oil, and Non-Oil Real GDP Growth).
  - Contribution of non-oil and oil sectors to overall growth is shown; overall growth remains below 2000–10 average overall growth in many cases.
  - Some pick-up in inflation in oil importers this year, and in GCC oil exporters next year (Consumer Price Index, year-on-year).
- Labor market and demographics:
  - Economic transformation is needed to absorb new labor market entrants and reduce unemployment.
  - Projected labor force increase charted for 2017–2022; labor force in 2016:
    - MENAP Oil Importers 138 million
    - MENAP Oil Exporters: 46 million
  - Unemployment rate series presented (simple average for Egypt, Morocco, Pakistan, Sudan, and Tunisia).
- Conflict and humanitarian risks:
  - Regional conflicts continue to weigh on the outlook, with an added risk of famine in Somalia and Yemen.
  - Refugee hosting is significant across MENAP countries (registered refugees and share of population plotted by country).

### Fiscal and Financial Conditions
- Public debt and fiscal balances:
  - Debt needs monitoring in oil exporters, and is an even more pressing priority for oil importers (Public Debt, Percent of GDP charts comparing 2010 and 2016, with median, mean, inter-quartile ranges, and outliers).
  - Important fiscal progress in oil exporters has occurred, but more is needed and ambitious plans need to be implemented (Overall fiscal balance and Overall non-hydrocarbon primary balance charts).
  - In oil exporters, adjustment is taking place through both revenue and expenditure reforms:
    - Charts display Non-oil Revenues and Public Expenditures (Capital, Wages, Other Current, Interest) in percent of Non-oil GDP for 2015, 2016, and 2017–22 projection.
  - Trends in oil importers are encouraging but energy-subsidy gains are declining:
    - Change in Expenditure and Revenue (PPT change from prior year, percent of GDP) with components Capital, Subsidies, Wages, Interest, Other Current, Overall Revenue across periods 2010–13, 2014–15, 2016, 2017.
  - In oil importers, continued fiscal adjustment over the medium-term is warranted; charting shows Public Debt and Fiscal Adjustment (Percent of GDP) with regions indicating "More adjustment/Less adjustment" and "Lower Debt/Higher Debt".
- Emerging financial vulnerabilities:
  - Private credit growth and Non-Performing Loans trends are highlighted:
    - Private Credit Growth (Percent change, year-on-year) shown for GCC, Non-GCC, MENAP Oil Importers across 2012–16.
    - Non-Performing Loans (Percent of Total Loans) series presented with latest observations across jurisdictions (2012–Latest).

### Key Themes and Policy Priorities
- Macro-structural implications and priorities:
  - Global growth momentum represents an opportunity but risks remain elevated.
  - Prospects for key trading partners have firmed.
  - Reforms are needed to diversify the economy, boost productivity, enhance competitiveness, and generate employment.
  - Continued focus on rebuilding buffers and addressing fiscal and financial vulnerabilities is necessary.
- Critical reform areas (many common priority areas across countries):
  - Business Environment
  - Labor Market
  - Fiscal Structural Reforms
  - Infrastructure
  - Banking System
  - Capital Market Development
  - Legal System & Property Rights
  - Trade Liberalization
  - Agriculture
- Country examples and reform types are listed in source diagrams (country groupings by reform priorities and income levels).

### What the IMF Is Doing and Policy Recommendations
- IMF engagement and support modalities:
  - Tailored program design and policy advice.
  - Technical assistance.
  - Facilitating dialogue with peers.
  - Analytical work.
  - Catalyzing support from partners.
- Implementation and sequencing:
  - Reform is a long and complex process that needs sustained commitment.
  - Building public support is key, and the vulnerable need to be protected during adjustment.
- Summary of key messages (from source):
  - Improved global outlook represents an opportunity, but risks remain elevated.
  - Reforms are critical to secure resilience and generate higher and more inclusive growth.
  - Fiscal adjustment continues to be needed, though pace and design will differ depending on country circumstances.
  - Financial sector vulnerabilities need to be monitored and addressed, with the need to address them acute in some countries.

*Source: MENAP Regional Economic Outlook, May 2, 2017 (menap0517p)*

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_Source: https://www.imf.org/-/media/files/publications/reo/mcd-cca/2017/may/pdf/menap0517p.pdf_