The Economies of the Middle The Economies of the Middle ... · The Economies of the Middle The Economies of the Middle East and East and North Africa:North Africa: ... Presentation

The Economies of the Middle The Economies of the Middle East and East and North Africa:North Africa:NearNear--term Outlook and Mediumterm Outlook and Medium--term Challengesterm Challenges

The Economies of the Middle The Economies of the Middle East and East and North Africa:North Africa:NearNear--term Outlook and Mediumterm Outlook and Medium--term Challengesterm Challenges

MoroccoTunisia Lebanon

SyriaIraq I

AfghanistanMoroccoJordan

Egypt

AlgeriaLibya

Iraq

Kuwait

Qatar

Saudi Arabia

Iran

BahrainPakistan

Mauritania

QatarUnited Arab

EmiratesOman

YemenSudan

Djibouti

Oil Importers

Oil Exporters

Masood AhmedPresentation at the Canon Institute for Global Studies

Tokyo October 2012

Masood AhmedPresentation at the Canon Institute for Global Studies

Tokyo October 2012Tokyo, October 2012Tokyo, October 2012

Overview

MENAP Oil Exportersp

MENAP Oil I tMENAP Oil Importers

Middle East and North Africa, Tokyo, October 2012 2

MENAP MENAP Oil ExportersOil ExportersMENAP MENAP Oil ExportersOil ExportersppReducing vulnerability and creating privateReducing vulnerability and creating private--sector jobssector jobs

ppReducing vulnerability and creating privateReducing vulnerability and creating private--sector jobssector jobs

Accommodative fiscal and monetary policy

Large government wage bill increases

High oil prices, but sensitive to global

economic developments

Recovery in Libya

Robust GDP growthgLarge current account surpluses

Increasing fiscal vulnerability to oil priceLimited private-sector employment outlookLimited private-sector employment outlook

Gradually save more and reduce spending rigiditiesFind alternatives to public-sector hiring

Middle East and North Africa, Tokyo, October 2012 3 MENAP Oil ExportersMENAP Oil ExportersMENAP Oil ExportersMENAP Oil Exporters

Non-oil GDP growth strong, current accounts buoyant

Real GDP(A l t th)

Current Account Balances(Billi f U S d ll )

6

8

10

Non-oil GDP

Oil GDP

(Annual percentage growth) (Billions of U.S. dollars)

110

120

130

300

350

400

0

2

4

90

100

110

200

250

300

-4

-2

0

60

70

80

50

100

150

-62007 2008 2009 2010 2011 2012 2013 500

2010 2011 2012 2013

GCCNon-GCC

Sources: National authorities; and IMF staff calculations.

Non GCCCrude oil price, U.S. dollars per barrel (right scale)


Higher government wage bills increase fiscal vulnerability

Government Wage Bill Growth, 2010–13 Fiscal Breakeven Prices

70

80

g ,(Percent, deflated by CPI)

Iran140

160 Change in WEO oil price, 2008-12: US$9

Fiscal Breakeven Prices(U.S. dollars per barrel)1

40

50

60 Algeria

Iraq

LibyaOmanUnited Arab

Emirates

Bahrain

100

120

n pr

ice,

201

2

WEO oil price, 2012: US$106

10

20

30

KuwaitQatar

Saudi Arabia

40

60

80

Fisc

al b

reak

eve

-10

0

0

20

0 10 20 30 40 50 60 70

FChange in fiscal breakeven price 2008 12


Change in fiscal breakeven price, 2008-12

1Yemen fiscal breakeven, 2012: US$237


Fiscal and external balances sensitive to oil prices

GCC Fi l B l GCC C t A t B l

25 35

GCC Fiscal Balances(Percent of GDP)

GCC Current Account Balances(Percent of GDP)

19.0

10.910

15

20 30.4

22.9

20

25

30

0.10

5

10

10.7

5

10

15

-8.8-10

-5

2000 2002 2004 2006 2008 2010 2012 2014 2016

-0.2

-5

0

5

2000 2002 2004 2006 2008 2010 2012 2014 20162000 2002 2004 2006 2008 2010 2012 2014 2016

Sources: National authorities; and IMF staff calculations. Note: Shaded area shows fiscal and current account balances for an oil price up to US$28 per barrel (one standard deviation) higher or l th th f t il i f 2013 t 2017


lower than the forecast oil price for 2013 to 2017.

MENAP Oil ExportersMENAP Oil ExportersMENAP Oil ExportersMENAP Oil Exporters

Public-sector employment crowds out the private sector

Public- and Private-Sector Employment Rates(Percent latest year)(Percent, latest year)

Qatar90

rce)

Iran

Lebanon

Morocco

UAEYemen

70

80

rcen

t of l

abor

for

Algeria

Egypt

JordanSyria

60

70

ate

sect

or (p

er

Algeria

500 10 20 30 40

Priv

a

Source: IMF staff calculations.

Public sector (percent of labor force)


MENAPMENAP Oil ImportersOil ImportersMENAPMENAP Oil ImportersOil ImportersMENAP MENAP Oil ImportersOil ImportersRestore macroeconomic stability and accelerate growthMENAP MENAP Oil ImportersOil ImportersRestore macroeconomic stability and accelerate growth

Euro area recession and slowing EMs

High food and fuel prices

Political reforms in some countries

Spillovers from Syria

Policy response with subsidies

Large financing needs

D t ti i 2012

p

• Downturn continues in 2012• Policy buffers depleted

• Macroeconomic stability so far, but concerns rising

Fiscal consolidation, better target social spending, g p gGreater exchange rate flexibility

Strengthen competitiveness through structural reforms

Middle East and North Africa, Tokyo, October 2012 8 MENAP Oil ImportersMENAP Oil ImportersMENAP Oil ImportersMENAP Oil Importers

Downturn continues in 2012, weak recovery in 2013Downturn continues in 2012, weak recovery in 2013

Real GDP Growth(Percent)

6

82011 2012 2013

( )

2

4

-2

0

-6

-4

MRT AFG DJI PAK JOR MAR TUN LBN EGY SDN

-11.2



Falling exports, weak recovery in tourismg p , y

Exports and Imports of Goods International Tourist Arrivals

60

80

Exports Imports 120

140(Annual percentage change) (Index; Jan 2010=100, seasonally adjusted)

40

80

100

0

20

40

60

EGY -25.8 29.12012/10 2012/11

Percent change

40

-20

0

20

40JORLBNMARTUN

-19.9-24.75.2

-13.5

-3.8-7.3-4.249.7

-40Jun-08 Jun-09 Jun-10 Jun-11 Jun-12

0Jan-10 Jul-10 Jan-11 Jul-11 Jan-12

Sources: Haver Analytics; and national authorities.


Terms of trade shocks, persistent current account deficits, p

Terms of Trade Current Account Balance

6

9

Terms of Trade(Percent change; increase = improvement)

0

1

Current Account Balance(Percent of GDP)

0

3

6

2

-1

0

-3

0

-3

-2

-9

-6 2011 to 20122009 to 2012

40.4-5

-4


-12TUN EGY LBN DJI MAR MRT JOR PAK

-62002 2004 2006 2008 2010 2012


Larger subsidies, shrinking reserve buffers

Gross International ReservesIncrease in Government Expenditures(Months of imports and billions of U.S. dollars)

12

p(Percent of GDP, 2012 versus 2010)

15

6

9

$30$3512

2010 2012

0

3

$35 $12

$246

9

-6

-3

AFG DJI EGY JOR LBN MRT MAR PAK SDN TUN

$13$10

$16

$7 $18

$11$8

3


AFG DJI EGY JOR LBN MRT MAR PAK SDN TUN

Other Capital expendituresWages and salaries Subsidies and transfersTotal expenditure

0EGY JOR LBN MAR PAK TUN


Planned consolidation to reduce debt, but is subject to risks

Contribution of Various Factors to Debt Accumulation(Percent 2010 16)

6

8(Percent, 2010–16)

0

2

4

-4

-2

-62010 2011 2012 2013 2014 2015 2016

Stock-flow adjustment Interest-growth differentialCyclical component of primary deficit Cyclically adjusted primary deficitChange in debt-to-GDP ratio


Change in debt-to-GDP ratio


Key Messagesy gOil Exporters

• Robust non oil GDP growth 2012 growth figure driven by Libyan• Robust non-oil GDP growth, 2012 growth figure driven by Libyan recovery

• Rising non-oil fiscal deficits and fiscal breakeven prices increasing fiscal g p gvulnerability

• Continue to promote diversification and private-sector employment

Oil Importers

• Downturn continues in 2012; weak recovery projected in 2013, yet not enough to tackle unemployment

• Depletion of policy buffers leading to urgency for fiscal consolidation; external financing can helpexternal financing can help

• Prompt action on macro-economic policies and reforms is needed to boost growth and job creation


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The Economies of the Middle The Economies of the Middle ... · The Economies of the Middle The Economies of the Middle East and East and North Africa:North Africa: ... Presentation