Middle East and Central Asia
Middle East and Central Asia, October 31, 2016
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- Published: October 31, 2016
- Series: Middle East and Central Asia
MENAP: Middle East, North Africa, Afghanistan, and Pakistan — Oil Exporters (Chapter 1)
- Context: Continuing exceptionally challenging environment due to low oil prices, deepening conflicts, and spillovers from slowdowns in Russia and China.
- Key developments:
- Moderate oil price recovery.
- Progress in fiscal consolidation in many countries, but sustained efforts required over the medium term to place public finances on a sound footing.
- Plans announced to diversify economies away from oil and create jobs for rapidly-growing populations; transformation will take time and requires careful, steady implementation.
- Financial stability risks remain, notably tightening liquidity and risk of deteriorating asset quality.
- Policy implications:
- Continued fiscal consolidation to restore fiscal buffers.
- Vigilance on financial stability and liquidity management while pursuing diversification.
MENAP: Oil Importers — Growth and Inclusiveness Challenges (Chapter 2)
- Macro overview:
- Macroeconomic stabilization advancing following recent energy subsidy reforms and low oil prices.
- Growth remains weak and fragile amid regional conflicts, structural impediments, and subdued external demand.
- Over the medium term, growth is set to remain too low to address persistently high unemployment and low economic inclusiveness.
- Key constraints:
- Limited fiscal space due to high debt service costs and large wage bills.
- In some cases, external vulnerabilities remain high.
- Reform priorities:
- Deeper structural reforms to lower business costs, improve access to finance and export markets, and enhance worker talent.
- Greater exchange rate flexibility in some cases to improve competitiveness.
- Highlights:
- Subdued economic activity.
- Lackluster medium-term prospects.
- Rising downside risks.
- Need for implementing fiscal, monetary, and structural reforms.
- Role for international support.
Caucasus and Central Asia (CCA) — Coping with External Shocks (Chapter 3)
- Recent developments:
- Fiscal accommodation and exchange rate adjustment have helped mitigate immediate impacts from commodity price slumps and weaker growth in key trading partners.
- Growth is starting to recover, but the region faces increased fiscal, external, and financial sector vulnerabilities and less policy space.
- Key risks and needs:
- Need to formulate credible multiyear fiscal plans.
- Modernization of monetary policy frameworks.
- Strengthening of financial supervision.
- Structural transformation to diversify away from commodities and reduce reliance on remittances.
- Summary points:
- Weak and fragile recovery.
- Challenging yet critical exchange rate adjustment.
- Easing inflationary pressures.
- Financial vulnerabilities still rising.
- Declining space for further fiscal easing.
- Exports supporting external positions.
- Multifarious downside risks.
How Will China’s Rebalancing Affect the Middle East and Central Asia? (Chapter 4)
- Channels of impact:
- Weaker commodity prices, slower global growth, and higher global risk aversion.
- Magnitude of impact:
- Overall impact on MENAP and CCA likely to be small — between 0.01 percent and 0.1 percent for each 1 percentage point slowdown in China’s growth.
- Within regions, commodity exporters would be impacted the most.
- Opportunities:
- China’s One Belt One Road (OBOR) investments, mainly in infrastructure, could help increase growth in the CCA and Pakistan even if investment is less than originally planned.
- Potential to increase consumption-oriented exports (tourism, agricultural products, clothing) and create jobs.
- Policy recommendations:
- Step up structural reforms to improve the business environment and boost productivity and competitiveness to reap benefits from China’s rebalancing.
October 2016 — Middle East and Central Asia regional overview (IMF).
Content in this bundle
- IMF Regional Economic Outlook, Middle East and Central Asia, October 2016
- Acknowledgments: Regional Economic Outlook: Middle East and Central Asia; October 2016
- Assumptions and Conventions: Regional Economic Outlook: Middle East and Central Asia; October 2016
- Regional Economic Outlook: Middle East and Central Asia; CCA Region Highlights -- October 2016
- Country Groupings: Regional Economic Outlook: Middle East and Central Asia; October 2016
- Statistical Appendix -- Regional Economic Outlook: Middle East and Central Asia; April 2016
- Mreo1016ch1
- Regional Economic Outlook
- World Economic Outlook : Regional Economic Outlook: Middle East and Central Asia; October 2016
- Mreo1016ch2
- Mreo1016ch3
- mreo1016ch4
- Mreo1016ch5