## May 2, 2018 — Middle East and Central Asia Regional Economic Outlook (menap0518-presentation) ## Source details **Canonical URL:** [May 2, 2018 — Middle East and Central Asia Regional Economic Outlook (menap0518-presentation)](https://www.imf.org/-/media/files/publications/reo/mcd-cca/2018/may/english/menap0518-presentation.pdf) ## Other formats - [Markdown version](/-/media/files/publications/reo/mcd-cca/2018/may/english/menap0518-presentation.pdf.md) - [Structured JSON version](/-/media/files/publications/reo/mcd-cca/2018/may/english/menap0518-presentation.pdf.json) --- ### Outlook: From global to regional - The broad-based global recovery continues. - Growth recovering in oil-exporting countries. - Continuing, but fragile, growth recovery in oil-importing countries; note MENAP Oil Importers and MENAP Oil Importers with IMF Programs are highlighted. - Developments in conflict countries remain volatile (specific country examples: Iraq, Libya, Yemen). - The region is not fully benefitting from the favorable global growth upswing (2018-22 average growth and GDP per capita relative to peers discussed). ### External environment and risks - External demand and some gains in competitiveness are supporting factors (Current Account Deficit and Real Effective Exchange Rates referenced for JOR LBN MAR PAK TUN EGY). - The outlook for oil prices remains uncertain, weighing on the growth of oil exporters (Brent Crude Oil projections and confidence intervals shown; futures referenced). - Commodities prices series shown for Metals, Agricultural products, and APSP Crude Oil, US$ per barrel. - Geopolitical tensions remain a drag on growth in MENAP (EIU Security and Political Risk Index; values shown between 2.3 and 3.9 for Oct-17 to Mar-18). - Borrowing conditions could become more challenging: U.S. Libor Interest Rate referenced; International Debt Maturing in 2018-22 reported in percent of GDP for several countries; Cumulative Fiscal Deficits 2018-22 (Billion, US dollars) shown for MENAP Oil Exporters and MENAP Oil Importers. ### Fiscal, monetary, and financial positions - Debt levels increased, limiting scope to use fiscal policy to stimulate growth (Total Public Debt in 2011 vs. 2017, Percent of GDP, and Public Gross Debt in 2017 plotted for MENAP Oil Exporters and MENAP Oil Importers). - Need to maintain fiscal adjustment, but room to make it more growth-friendly (Fiscal Deficit for MENAP series shown for 2015 and 2016–23). - Despite subsiding inflationary pressures, little scope for accommodative monetary policy (Inflationary Pressures Subsiding: CPI year averages for MENAP oil exporters and MENAP oil importers; Selected Policy Rates for Jordan, Bahrain, Saudi Arabia, Egypt, Qatar, Tunisia, Pakistan). - More needs to be done to increase access to finance by the private sector (Non Performing Loans percent of total loans; Private Credit Growth percent year-over-year; country-level private credit and NPL comparisons). ### The Way Forward: Strengthen growth and resilience - Promote a dynamic private sector by reducing red tape and strengthening institutions: - Challenges to Doing Business listed: Restrictive labor regulations; Access to finance; Inadequately educated work force; Inefficient govt bureaucracy; Poor work ethic in national labor force; Policy Instability; Corruption; Inadequate supply of infrastructure; Insufficient capacity to innovate; Government instability; Tax regulation. - Private Investment series and country-level comparisons against EMDE average, 2014. - Encourage further opening and diversification to benefit from trade opportunities: - Export Diversity Index, 2014 (0 to 1, higher is more diverse) referenced. - Estimated Contributions of Trade Openness to Growth (Percent) for MENAP Oil Exporters and MENAP Oil Importers (2018–22 expected annual growth). - Complement by inclusive policies to ensure growth is shared by all: - Inclusive growth priorities: 1. Improve governance and control of corruption; 2. Increase Access to finance; 3. Strengthen social safety nets; 4. Increase opportunities for youth; 5. Eliminate gender disparities; 6. Support rural communities; 7. Help refugees. ### Fund engagement and country programs - IMF Financial and Technical Assistance (programs and dates listed): - AFG: ECF (7/20/2016) - EGY: EFF (11/11/2016) - IRQ: SBA (7/7/2016) - JOR: EFF (8/24/2016) - MRT: ECF (12/6/2017) - MAR: PLL (7/22/2016) - TUN: EFF (05/20/2016) - Technical assistance measured in Person-Years of Field Delivery, 2017 (country coverage shown). ### Key statistics and indicators highlighted - Brent Crude Oil projections and confidence intervals (futures and 95%/86%/68% confidence intervals plotted). - Political risk index values shown in range: 2.3 to 3.9 (Oct-17 to Mar-18). - Public debt comparisons: Public Gross Debt in 2011 vs. 2017 plotted against Rest of the World, MENAP Oil Importers, MENAP Oil Exporters. - Inflation and policy rate series presented for multiple countries (see Selected Policy Rates and Inflationary Pressures Subsiding). ### Takeaways and policy recommendations - MENAP Region needs to make the most of the global recovery to enhance growth and to strengthen fiscal and financial stability. - Further reforms are needed to create jobs and secure sustainable and more inclusive growth. - Policy Recommendations: - MENAP OE: Time to accelerate reforms and maintain fiscal consolidation, while accelerating economic diversification strategies. - MENAP OI: Fragile growth recovery with vulnerabilities remaining, calling for further reforms to secure resilience and job creation. *Source: menap0518-presentation (May 2, 2018) — Middle East and Central Asia Regional Economic Outlook* --- _Source: https://www.imf.org/-/media/files/publications/reo/mcd-cca/2018/may/english/menap0518-presentation.pdf_