"This high rate was achieved despite the geopolitical problems in the region, particularly the Syrian conflict, thanks to the swelling oil prices and revenues," ESCWA Chief Economist and Director, Economic Development and Globalisation Division, Abdallah Al-Dardari said. He was speaking at the launch in Beirut of ESCWA’s latest Survey of Economic and Social Developments in the Arab Region.
The report says the recovery in the Maghreb sub-region, particularly of Libya, and the consistent economic growth in Gulf Cooperation Council (GCC) countries were significant contributing factors. For 2013, the average real GDP growth rate of the region is projected at 4.4 per cent. The GDP growth rate on average is likely to taper off due to the decline in energy export revenues which marked a historic high in 2012.
It goes on to say, “However, the polarisation of economic and social developments in the region deepened in 2012. Major energy exporters in the region, namely GCC countries, are on a stable recovery path which was enabled by an expansionary fiscal and monetary policy mix. At the same time, net energy importing countries in the region are struggling to stabilize their economies amid worsening foreign exchange constraint. The polarisation resulted in part from political instability and social unrest, but also from the diminished flow of intraregional trade, tourism and investments. The lack of confidence in intraregional business transactions resulted in the segmentation of regional economies and the loss of regional leverage, which amplified the seriousness of unemployment throughout the region, even in GCC countries.
“Amid those economic and employment difficulties, social development in the region has continued gradually through policy reforms and institutional development. Most notably in 2012, Saudi Arabia took a series of active labour policies for nationals and emphasised the importance of female employment. Concurrently, the social dynamics of the region have been characterised by social unrest and political instability. The structural weakness of the economies in the Arab region, represented by high unemployment rates and income inequality, is the chronic undercurrent motivating social unrest and political instability. Reviving effective regional leverage through further cooperation and integration is crucial to compensate for failing market-based intraregional resource transfers.”