World Economy

MENA Economic Prospects Bleak

MENA Economic Prospects Bleak MENA Economic Prospects Bleak

Growth in the Middle East and North Africa is forecasted to average 4.2 percent in 2015, the World Bank reported in its latest Middle East and North Africa Economic Monitor.

“The violent conflicts in Syria, Iraq, Gaza, Yemen and Libya with their spillovers to Lebanon and Jordan could make MENA’s economic prospects bleak,” Albawaba quoted Inger Andersen, World Bank Regional Vice President for the Middle East and North Africa, as saying.

A more optimistic scenario based on an increase in public and private consumption from expansionary fiscal policies, easing political tensions crowding-in investments in Egypt and Tunisia, continued subsidy reforms in Egypt, Jordan and Yemen, and a resumption of oil production in Libya, puts growth at 5.2 percent in 2015.

Given the latter scenario, growth is projected to pick up to 2 percent in Lebanon, 3.1 percent in Egypt, 2.7 percent in Tunisia and 4.6 percent in Morocco, while it will average 2-3 percent in Algeria and Iran, according to World Bank figures.

The intensification of the civil war in Syria and the continued influx of refugees have adversely affected Lebanon’s economy, which is not expected to grow by more than 1.5 percent in 2014, the report said.

The World Bank forecast Lebanon’s overall fiscal deficit to widen to 10.2 percent of GDP in 2014, compared to 9.4 percent during the previous year, while the primary balance will register a deficit for the third consecutive year, increasing by a projected 0.7 percentage points to 1.2 percent of GDP.

As a result, gross public debt will rise to a forecast 149 percent of GDP in 2014, compared to 143.1 percent of GDP at end-2013. The current account deficit is forecasted to reach 8.3 percent of GDP in 2014, in line with the previous two years.

An average of 3 percent growth in the MENA region is forecast in 2014, however, a big gap separates oil-producing and developing countries, according to the World Bank report.

Developing countries are expected to grow at 0.7 percent, a bit faster than last year’s 0.4 percent, while oil-producing countries had a projected growth rate of 4.9 percent in 2014.

In oil-producing countries, GDP growth is forecast to average 5 percent in 2015.

However, the report noted that high-income countries faced structural problems that might constrain their growth in the future.