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Ghanem: positive forecast

Ghanem: positive forecast



Growth to exceed 3pc in Mena: World Bank

May 2018

A favourable global economic environment, stability in the oil market at slightly higher prices and the resumption of post-conflict reconstruction will drive growth in the Mena to 3.1 per cent in 2018, up from 2 per cent last year, said the World Bank Group’s latest Mena Economic Monitor.

“There are grounds for optimism,” said Hafez Ghanem, World Bank vice president for the Mena region. “Now is the time to focus on creating more jobs and economic opportunities for youth. The positive outlook is an opportunity to speed up reforms for a renewed private sector as an engine of growth and job creation.”

On the back of a good performance by Gulf Cooperation Council countries, oil exporters could see growth reach 3 per cent in 2018, double the rate in 2017. Growth among oil importers is expected to increase to 4 per cent on average from 2018 to 2020, driven by a sharp rebound in Egypt and a rise in remittances, tourism and exports.

Almost all countries in the region have embarked on major reforms to reduce or eliminate energy subsidies, identify new sources of non-oil revenues, and expand social safety nets to shield the poor from adverse effects of change.

“While stabilisation policies have helped economies adjust in recent years, we need much faster growth to absorb the hundreds of millions of young people who will enter the labour market in the coming decades,” said Rabah Arezki, World Bank chief economist for the Mena region. “In this report, we study ways for transforming rather than adjusting the region’s economies, to achieve the growth needed.”

Low oil prices and a global shift toward renewable energy to meet climate goals pose risks and opportunities. With its abundant sunshine, the region can leverage the power of solar technology. Turning risks into opportunities will require innovation and the adoption of new technologies.

Along with helping the region adapt to the new reality of low oil prices, leveraging new technologies could be a new engine of growth and jobs for the regions. A focus on corporate governance will need to accompany efforts to improve the business environment, to create a new system of incentives at the firm level that encourages the bold and creative thinking required for economic transformation.

Adopting new technologies will require significant investments in infrastructure, which will require greater leveraging of private finance. This can be achieved through public-private partnerships, which Jordan has used to build the Queen Alia airport, and Egypt to attract sizeable private investments in its energy sector.

Public-Private partnerships have the added advantage of drawing on the innovation and efficiency of the private sector, and are a step toward changing the role of the state from the main provider of employment to an enabler of private sector activity.




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