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Middle East and Central Asia
Regional Economic Outlook Update: Middle East & Central Asia
May 2013
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©2013 International Monetary Fund
Two years after the onset of the "Arab Spring," many countries in the Middle East and North Africa continue to undergo complex political, social, and economic transitions. Economic performance across the region was mixed in 2012: although most oil-exporting countries grew at healthy rates, economic growth remained sluggish in the oil importers. In 2013, these differences are expected to narrow because of a scaling-back of hydrocarbon production among oil exporters and a mild economic recovery among oil importers. Many countries face the immediate challenge of re-establishing or maintaining macroeconomic stability amid political uncertainty and social unrest, but the region must not lose sight of the medium-term challenge of diversifying its economies, creating jobs, and generating more inclusive growth.
For the countries in the Caucasus and Central Asia region, the near-term outlook remains broadly favorable, reflecting high oil prices for the oil and gas exporters and strong non-oil commodity prices and robust remittances in the oil and gas importers. Risks to this favorable outlook could stem from still-subdued world demand, domestic political uncertainties, and geopolitical risks in the region. Policymakers, particularly in the oil-importing countries, should take advantage of the favorable outlook to re-establish fiscal policy buffers that were eroded in the aftermath of the global crisis. Across the region, countries should reinvigorate their reform efforts to address longstanding structural issues, with a view to improving governance, building an investor-friendly environment, developing a more inclusive financial system, and fostering regional trade and finance integration.
