Fragile recovery of Arab economies at risk IMF

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The Arab world is facing a number of major challenges that risk undermining fragile gains made in the past 18 months, especially by those countries that have experienced regime change, the IMF has warned.

“The odds appear somewhat stacked against the Arab countries in transition,” First Deputy Managing Director, David Lipton said late on Tuesday on a visit to Tunisia, where a mass uprising in late 2010 touched off the Arab Spring.

“In addition to a slowing world economy and ongoing uncertainties in Europe, higher food and fuel prices, and the conflict in Syria are developments that risk undermining the fragile gains... in the region this past year and a half,” Lipton added.

Speaking to Tunisian businessmen, he highlighted the progress made in terms of political changes, but warned that “substantial uncertainties remain, holding back confidence and slowing economic recovery.”

Lipton said the IMF expected a “moderate recovery” in the Middle East and North Africa in 2013, which he described as “encouraging” but not sufficient to permit a sharp reduction in the high unemployment dogging the region.

The bleak economic prospect for many young Arabs was a driving factor behind the revolutions that swept the region last year. High youth unemployment has persisted in Tunisia, as elsewhere, with social unrest often turning violent.

Lipton urged Tunisia and other countries in the region to push ahead with reforms, to encourage investment, boost productivity and create jobs.

“The time has come to implement reforms that can deliver higher and more inclusive growth and create new jobs for millions of people,” he said.
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