Growth in MENA to reach 2.8% by 2020: World Bank

CAIRO – 3 October 2018: The World Bank expected growth in the Middle East and North Africa (MENA) to reach 2.8 percent by 2020.

In 2018, the bank anticipated growth in MENA to hit an average of 2 percent, compared to an average of 1.4 percent in 2017.

The bank attributed the expected rise of growth to the recent rise in oil prices, which has benefitted the region’s oil exporters, while putting pressure on the budgets of oil importers, adding that it also reflects the impact of modest reforms and stabilization efforts undertaken in some countries in the region.

The bank said in a report that the instability in the region could risk the growth, while the bank forecasted that the region’s oil exporters will benefit from oil prices and demand that will remain high, clarifying that domestic reforms to increase revenues and contain public spending, such as in Saudi Arabia, will also contribute to growth in oil exporters.

“The region’s oil importers are expected to benefit from reforms to manage public expenditures, rising trade with Europe and China, and financial inflows from MENA oil exporters,” the bank said in a report.

As per Egypt, The bank expected the growth to reach 5.8 percent in 2020 driven by a reform program that has included the liberalization of the exchange rate, rationalized energy subsidies, and increased social protection for the poor.

“Overall, reforms in the region have led to cumulative savings of nearly $180 billion, mostly in oil exporting countries, providing governments additional financial space to continue economic reforms,” the report stated.

Despite the bank's expectations, it described growth by slow, noting that this pace will not generate enough jobs for the region’s large youth population.

The bank stressed new drivers of growth are needed to reach the level of job creation required.

“Far too many of the region’s young men and women are unemployed,” World Bank Vice President for the Middle East and North Africa Region Ferid Belhaj said. “This challenge will continue to grow unless it is turned into an opportunity. The current growth momentum is a chance to increase the speed and ambition of reforms. The focus should be on building a modern economy that leverages new technology and is driven by the energy and innovation of young people.”

The report entitled "A New Economy for the Middle East and North Africa" offered a roadmap for unlocking the enormous potential of the region’s large and well-educated youth population by embracing the new digital economy.

The report clarified that reaching this goal requires the reorientation of education systems toward science and technology, the creation of modern telecommunication and payment systems, and the establishment of a private-sector driven economy governed by regulations that encourage rather than stifle innovation.

“Countries in the region possess all the ingredients they need to leapfrog into the digital future,” World Bank Chief Economist for the Middle East and North Africa Region and lead author of the report Rabah Arezki said.

“The key is making sure young people are taught the skills needed for the new economy, have access to tools such as digital payments, and that obstacles to innovation are removed. It will require governments acting on many fronts, and pulling multiple policy levers, but the rewards in growth and jobs will be more than worth it,” Arezki added.

The report also recommended setting out goals, such as achieving parity with advanced economies in information and communication technology by 2022, noting that these sorts of bold objectives can serve to unite governments, citizens and the private sector in the collective effort needed to achieve the ambitious agenda.