Thursday, April 18, 2019

Economic growth of the Arab countries in the coming years

The Arab Monetary Fund expects Arab countries to grow by 3.1 per cent in 2019 and 3.4 per cent in 2020, reflecting expectations that the growth rate of the Arab Petroleum Exporting Countries will continue to rise to about 2.8 and 3.1 per cent in 2019 and 2020 respectively , Amid an expected divergence of trends in economic activity across the Group.

The Arab Economic Outlook, issued by the Fund for the month of April, was quoted by aleqt.com. It included an update on the economic performance forecasts of the Arab countries on several levels including economic growth, trends in domestic prices, monetary and financial conditions and expectations for the sector. External relations in the Arab countries during the years 2019 and 2020.

The report pointed out that the most prominent policy priorities for the Arab countries is to create more job opportunities to meet the challenge of unemployment in light of the high rate of unemployment in the Arab countries to almost double the rate of global unemployment. The unemployment challenge in Arab countries is concentrated in the youth sector, especially females, where the unemployment rate among young people rises to 26 per cent according to World Bank data, which is also twice the global average. Young female unemployment is at the highest level Globally is 40 per cent compared to 15 per cent for the world average.

The potential repercussions of the Fourth Industrial Revolution and the subsequent technical developments increase the magnitude of the challenges facing Arab countries in the future.

Addressing the unemployment challenge requires the Arab countries to adopt an integrated approach based on a comprehensive transformation of the structures of the Arab economies, increasing labor market dynamics, facilitating access to finance, adopting institutional reforms to increase the flexibility of labor markets and products, As well as the establishment of educational observatories to explore the needs of the labor markets, seek greater integration into the global economy, and conclude trade liberalization agreements and labor and capital transfers.

With regard to trends in the development of domestic prices, the inflation rate in the Arab countries is expected to decline to 9.3 per cent and 8.1 per cent during 2019 and 2020, respectively, as a result of the low rate of inflation in the Arab oil-exporting countries to 6.1 per cent and 5.9 per cent respectively In 2019 and 2020.

At the sub-group level, inflation in the GCC is expected to fall to around 1.3 per cent in 2019, while inflation is expected to be about 1.6 per cent by 2020. In other oil-producing countries, The inflation rate to about 6.3 per cent during 2019. While expected to reach about 6.5 per cent during 2020.

In the group of Arab oil-importing countries, inflation is expected to fall to about 11.8 percent in 2019 and 9.9 percent in 2020.

With regard to monetary conditions, it is expected that during the years 2019 and 2020, monetary conditions in Arab countries will be affected by economic trends, external demand levels and monetary policy positions in the United States and the European Union. In this context, the return of traditional monetary policy in the United States and the euro zone is expected to have implications for monetary conditions in countries that adopt fixed exchange rate regimes, which will affect the cost of domestic and external financing and capital flows.

In countries that adopt more flexible exchange rates, improved monetary conditions in some will remain linked to improved external demand levels, which will support net foreign assets, help to provide domestic credit and reduce interest rates, and help reduce pressures in the foreign exchange market.

With regard to the financial situation, the combined budget deficit of the Arab countries as a percentage of GDP is expected to decrease to 5.5 per cent in 2019, reflecting the expected impact of the fiscal reforms adopted during the forecast horizon.

On the external sector, the current account surplus is expected to stabilize at around 1.6 per cent of GDP in 2019 and 2020.

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