Estimating Potential Growth in the Middle East and Central Asia

IMF Working Papers, March 20, 2015

Source details

Canonical URL

Estimating Potential Growth in the Middle East and Central Asia

Other formats

• Markdown version
• Structured JSON version
• Bundle manifest

Bibliographic details

• Authors: Pritha Mitra, Amr Hosny, Gohar Abajyan, Mark Fischer
• Published: March 20, 2015
• Series: IMF Working Papers
• DOI: https://doi.org/10.5089/9781475545364.001

Summary

• The Middle East and Central Asia’s economic growth potential is slowing faster than in other emerging and developing regions, dampening hopes for reducing persistent unemployment and improving the region’s generally low living standards.
• The paper estimates potential growth, examines its supply-side drivers, and assesses which drivers could be most effective in raising potential growth.
• The analysis reveals that the region’s potential growth is expected to slow by ¾ of a percentage point more than the EMDC average over the next five years.
• The reasons behind this slowdown differ across the region:
  • Lower productivity growth drives the slowdown in the Caucasus and Central Asia and is also weighing on growth across the Middle East (MENAP).
  • A lower labor contribution to potential growth is the main driver in MENAP.
• Given some natural constraints on labor, total factor productivity growth is key to unlocking the region’s higher growth potential.
• For oil importers, raising physical capital accumulation through greater investment will also play an important role.

Major findings and key statistics

• Expected slowdown: potential growth to decelerate by ¾ of a percentage point more than the EMDC average over the next five years.
• Regional drivers:
  • Caucasus and Central Asia: slowdown mainly driven by lower productivity growth.
  • Middle East (MENAP): slowdown driven by both lower productivity growth and a lower labor contribution; the lower labor contribution is identified as the main driver in MENAP.
• Policy-relevant channels:
  • Total factor productivity (TFP) growth is central given limited labor expansion possibilities.
  • For oil-importing countries in the region, increasing physical capital accumulation via higher investment is an important avenue to raise potential growth.

Policy implications and recommended focus areas

• Prioritize policies and reforms that raise total factor productivity to unlock higher potential growth across the region.
• For oil importers, adopt policies to boost physical capital accumulation and investment to increase the capital contribution to potential growth.
• Address region-specific constraints:
  • In MENAP, consider measures that mitigate the declining labor contribution where feasible while emphasizing productivity-enhancing reforms.
  • In the Caucasus and Central Asia, implement policies that directly target productivity improvements.

Publication and metadata

• Title: Estimating Potential Growth in the Middle East and Central Asia
• Authors: Pritha Mitra, Amr Hosny, Gohar Abajyan, Mark Fischer
• Date: March 20, 2015
• Series: IMF Working Papers, Working Paper No. 2015/062
• Issue: 062
• Volume: 2015
• Pages: 27
• DOI: https://doi.org/10.5089/9781475545364.001
• ISBN: 9781475545364
• ISSN: 1018-5941
• Subjects: Commodities, Financial crises, Global financial crisis of 2008-2009, Labor, Oil, Oil prices, Prices, Production, Total factor productivity
• Keywords include: CCA oil importer, Central Asia., MENAP region, potential growth, production function, total factor productivity, physical capital accumulation, HP filter, IMF staff estimate

IMF Working Paper: "Estimating Potential Growth in the Middle East and Central Asia", Pritha Mitra et al., March 20, 2015.

Content in this bundle

• _wp1562
  • _wp1562 (Markdown version)
  • _wp1562 (PDF)