## Why the Arab World Needs an Economic Spring

_IMF Blog, May 18, 2012_

## Source details

**Canonical URL:** [Why the Arab World Needs an Economic Spring](https://www.imf.org/en/blogs/articles/2012/05/18/why-the-arab-world-needs-an-economic-spring)

## Other formats

- [Markdown version](/en/blogs/articles/2012/05/18/why-the-arab-world-needs-an-economic-spring/index.md)
- [Structured JSON version](/en/blogs/articles/2012/05/18/why-the-arab-world-needs-an-economic-spring/index.json)
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## Bibliographic details
- Authors: Nemat Shafik
- Published: May 18, 2012

---

### Political engagement contrasted with economic silence
- Political debate is widespread across the Middle East: "everyone is talking politics—all of the time."
- New political activity includes:
  - Constitutions being rewritten.
  - Political parties and youth groups becoming vibrant.
- Generational divide:
  - Older generation: "worried by the uncertainty associated with change."
  - Younger generation: "continues to be energized."

### Need for an economic rethink
- Despite political transitions in 2011, economic outcomes in non-oil countries deteriorated:
  - "Growth halved."
  - "Unemployment rose."
  - "Reserves came under pressure."
  - "Deficits ballooned as governments responded to social pressures by increasing spending on wages and generalized subsidies."
- New governments face:
  - High public expectations for jobs and justice.
  - "Limited resources and powerful vested interests."
- Call for an "Economic Spring" to parallel the "Arab Spring" and rethink the region's economic future.

### Key policy questions and priorities
- Move from generalized subsidies to targeted support:
  - Aim: "free up resources to invest in improving the education system and infrastructure."
- Make tax systems fairer:
  - Aim: "so that the poorest can be given a minimum standard of living."
- Boost private-sector job creation to address projected needs:
  - Exact target cited: "50-75 million jobs needed in the next decade."
- Concern: "Unfortunately, there is not yet any real discourse about these issues."

### External constraints and financing implications
- The region faces a tougher external environment than that faced by Eastern Europe after the fall of the Berlin Wall:
  - Contrast with the 1990s: then the world economy was booming, Europe provided a policy anchor through EU membership, and external finance was readily available.
  - For MENA today: "None of these conditions are the same" and "resources are limited."
- Implication: "Most of the economic transition in MENA will have to be financed through domestic resources and that means the numbers need to add up."
- Recommendation: "Launching such a debate in the months ahead is essential."

### Role of youth, education, and transparency
- The debate "must be indigenous and engage the younger generation whose economic futures are at stake."
- Observations from engagement with students at the American University in Beirut (AUB):
  - Students showed "obvious energy and talent" alongside worry about their futures.
  - Student concerns included:
    - "better access to education."
    - "jobs."
    - "protecting the environment."
    - "the need for transparency in public finances."
  - Students queried "how the IMF can help address the many challenges facing the region."

### Conclusion and warning
- Without an "Economic Spring" to accompany the "Arab Spring" and ongoing political transitions, there is a risk of failure on both political and economic fronts: "without an 'Economic Spring' ... we risk failure on both fronts."

*Why the Arab World Needs an Economic Spring — Nemat Shafik, May 18, 2012*

---


## References

- [عربي](http://blog-montada.imf.org/?p=1302)
- [subsidies](http://blogs.imf.org/2011/05/10/food-and-fuel-subsidies/)
- [jobs](http://blogs.imf.org/2011/11/16/bringing-the-informal-sector-into-the-fold/)
- [Arab Spring](http://blogs.imf.org/2011/12/06/the-arab-spring-one-year-on/)
- [subsidies](http://www.imf.org/external/pubs/ft/survey/so/2012/CAR051412B.htm)
- [jobs](http://www.imf.org/external/pubs/ft/fandd/2011/06/Abdih.htm)
- [much tougher external environment](http://www.imf.org/external/pubs/ft/survey/so/2012/CAR042012D.htm)
- [MENA](http://www.imf.org/external/pubs/ft/reo/2012/mcd/eng/mreo0412.htm)
- [economic futures are at stake](http://www.imf.org/external/pubs/ft/fandd/2012/03/straight.htm)
- [presentation](http://www.imf.org/external/np/speeches/2012/051012.htm)

_Source: https://www.imf.org/en/blogs/articles/2012/05/18/why-the-arab-world-needs-an-economic-spring_