Boosting inclusive growth agenda in Arab region says IMF middle east director

The Arab region has the highest level of youth unemployment in the world, averaging 25 percent, and more than 27 million young people will enter the labor market in the region over the next five years.


IMF | Updated: 12-07-2018 14:06 IST | Created: 12-07-2018 14:05 IST
Boosting inclusive growth agenda in Arab region says IMF middle east director
Reforms in support of inclusive growth can help lead to great achievements. (Image Credit: Flickr)
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Growth in the Middle East region has been sub-par since the global financial crisis, which has resulted in fluctuating income levels and insufficient job opportunities. There are internal structural causes for weak growth in the area, as well as external challenges that adversely affect the region and its economy, including volatility in global commodity prices. In addition, conflicts in the region have had a negative impact on stability and growth in its economies.

The Arab region has the highest level of youth unemployment in the world, averaging 25 percent, and more than 27 million young people will enter the labour market in the region over the next five years.

Reforms in support of inclusive growth can help lead to great achievements. For example, an annual increase of 0.5 percentage point in employment can raise real GDP growth to 5.5 percent and per capita income by 3.8 percent per year. The young people of the region have tremendous potential if given the right opportunities, and they are perhaps the best illustration of why promoting inclusive growth is vital to the region’s long-term success.

If the gap between men and women with regard to participation in the labour market were narrowed, growth in the countries of the region could be doubled within a single decade and cumulative GDP could be increased by a trillion dollars. If the region transferred the equivalent of 1 percent of GDP from spending on energy subsidies to investing in infrastructure, the result would be a 2 percent increase in real GDP and the creation of half a million new jobs over the next six years. By increasing the financing available to small and medium enterprises to the median level in developing countries, more than $300 billion could be provided to increase investments in the private sector in the region.

In fact, ladies and gentlemen, many countries in the region have placed creating jobs and achieving inclusive growth at the top of their reform programs, and some of these countries have taken steps to boost the economic and financial opportunities available to young people and women and to promote and develop the private sector.

Many countries are making efforts to use technology to expand economic and financial inclusion. FinTech projects in the region have increased seven-fold since 2009 in countries such as Egypt, Lebanon, Jordan, and the United Arab Emirates.

Jordan, for example, has created a service called eFawateerCom, which is an electronic platform that enables people to pay bills electronically by means of an ATM. This platform handles more than a million transactions per year and links its users to over 70 million Internet traders.

Among the important reforms being implemented by a number of countries in the region are measures to enhance the business environment, reduce bureaucracy, and promote small and medium enterprises.

In this context, Morocco has been able to create 85,000 jobs in the auto industry by enhancing the business climate and establishing free trade zones in Casablanca and Tangier. At present, about 45 percent of the spare parts required by the auto sector are manufactured by domestic suppliers.

The region is in desperate need of such efforts to adapt and transform, and the examples that we have cited need to be duplicated in other countries of the region, as they open new and better horizons for a future in which everyone can benefit from inclusive growth.

The International Monetary Fund believes that societies flourish when there are opportunities for everyone. It is essential that the countries of the region invest in their talented young people and strive to enhance opportunities for communication and interaction with the rest of the world.

At the beginning of the current year, the IMF held a conference in Morocco, which was organized jointly by the Government of the Kingdom of Morocco, the IMF, the Arab Fund for Economic and Social Development, and the Arab Monetary Fund. The conference was attended by over 300 people from 20 countries of the region, including government officials, representatives of the private sector and civil society, and global experts, who met to discuss how to overcome the obstacles facing the implementation of inclusive growth policies.

In the first session of the conference today, we will release a report on how to activate these programs and policies on the ground, and I am confident that we will conclude our discussions with an agenda that will help promote inclusive growth.

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