DUBAI, 20 September 2003 — The Middle East and North Africa (MENA) region needs a “bold” reform program to put an end to an economic stagnation causing alarming unemployment, the International Monetary Fund (IMF) and the World Bank said yesterday.
The stagnation is reflected by low productivity, weak non-oil exports and low integration into the global economy, said the IMF in a study.
Those factors are translating into unemployment exceeding 15 percent, added the report released in the United Arab Emirates’ city of Dubai, ahead of the annual meeting of the two institutions on Sept. 23-24.
“Clearly, economic and social tension are likely to mount and would require bold and courageous reforms,” World Bank vice-president for the MENA region, Christiaan Poortman, told AFP. He said the reforms should be undertaken in a view to protect those who are likely to suffer in the process of opening up the economy.
“Obviously, during a period of transition, every precaution should be taken to protect the vulnerable groups,” he said.
A World Bank working paper acknowledged that trade and services liberalization could increase unemployment as it removes protection from previously sheltered companies.
But in the longer run, the development of competitive companies and their integration into the global production network would spur sustained demand for labor, the paper added.
The IMF study painted a dark picture of the region’s economic performance since the end of the oil boom of the early 1970s, and of its political institutions as a whole.
It said real GDP per capita growth has been “near zero percent” over the past 30 years in the region, while all other developing countries grew at 2.5 percent per year.
The reasons for the sluggishness are MENA’s high population growth coupled with low productivity, large and costly public sectors, inefficient and inequitable educational systems, underdeveloped financial markets and high trade restrictiveness.