According to a new report from the World Bank, economic growth in the Middle East and North Africa (MENA) region is expected to rebound to an average of 2 percent in 2018, compared with 1.4 percent in 2017. This moderate rebound is mainly due to by the recent rise in oil prices, which has benefited the oil-exporting countries, but has increased the pressure on the budget of the importing countries. It also reflects the impact of the modest reforms and stabilization efforts undertaken in some countries in the region.
The pace of growth, however, is insufficient to create jobs that will absorb a large youth workforce. It is therefore essential to develop new growth drivers to reach the level of job creation needed.
The latest edition of MENA’s Mid-Year Monitoring Report on the Economic Situation, « A New Economy for the Middle East and North Africa », Paves the Way for Unlocking the Huge Potential of a Population young and educated if the region manages to take the digital turn. To achieve this, countries will need to embark on larger, bold reforms and make the necessary investments in digital infrastructure. The challenge will be to focus education more on science and technology, to create modern telecommunications and payment systems, and to foster the development of a private sector driven economy by putting in place regulations that instead of constraining innovation, they encourage it instead.
Unemployment, a major scourge for young people
« Unemployment is a scourge for many young men and women in the region, » said Ferid Belhaj, vice president of the World Bank for the Middle East and North Africa Region. And the problem of youth will continue to worsen unless it is an asset. The current growth momentum needs to be harnessed to accelerate the pace of reform and increase ambition. And focus on building a modern economy that harnesses new technologies and builds on the energy and innovation capacity of younger generations. »
According to the report, the region already has the foundations on which it can build this new digital economy, with a youth largely acquired in digital and mobile technologies. However, if portable devices are ubiquitous, they are primarily used to access social networks rather than to create new businesses. In question, the weight of regulatory obstacles, combined with the lack of key infrastructure. The report, however, highlights some promising initiatives. And to highlight the success of the application of VTC Careem, a start-up that is now worth a billion dollars and which is responsible for the creation of thousands of jobs in the MENA region and beyond.
New digital platforms are already linking jobseekers and employers, offering vocational training and hosting incubators. The challenge that remains is to create the conditions necessary for the development and multiplication of these young shoots.
« The countries of the region have all the necessary characteristics to enter the digital age, » says Rabah Arezki, chief economist of the World Bank for the Middle East and North Africa Region and lead author of the report. But it is now essential to provide young people with the knowledge they need for this new economy, to guarantee their access to such essential tools as digital payments and to remove obstacles to innovation. For that, governments will have to act on many fronts and mobilize several levers of public action at the same time, but the results they will obtain in terms of growth and employment will largely reward their efforts. »
Risk of instability likely to worsen
The report advocates setting specific goals, including the goal of catching up with the advanced information and communication technology economies by 2022. Such targets could in fact be used to rally public authorities, citizens and the private sector around an ambitious agenda and encourage them to take part in an indispensable collective effort. This momentum could transform MENA’s economies and enable its millions of young people to find quality employment and contribute to growth through their skills and creativity.
Regarding the regional economic outlook, the report expects a moderate recovery to continue, with an average growth rate of 2.8% by the end of 2020. Although the region is currently exposed to With a risk of instability likely to worsen and weaken growth, oil-exporting countries should benefit from the good performance of oil prices and demand. National reforms aimed at raising revenue and containing the level of public spending, such as those in Saudi Arabia, should also support the growth of these countries.
Oil-importing countries are expected to benefit from the effects of public expenditure management reforms, as well as increased trade with Europe and China and financial flows from oil exporters in the region. Egypt’s growth, in particular, is expected to reach 5.8% in 2020, thanks to a reform program that has sought to liberalize the exchange rate, streamline energy subsidies and strengthen social protection for all. poor people. The reforms implemented in the region have globally saved a total of almost $ 180 billion, mainly in the oil-exporting countries, which widens the budgetary room for maneuver of the governments in favor of the continuation of the economic reforms.