IMF: Arab Spring economies to recover slowly in 2013

DUBAI: Most economies hit by the Arab Spring uprisings will recover slowly next year, grappling with high inflation and rising unemployment due to poor global conditions, the International Monetary Fund predicted in a report yesterday.
In its outlook for the Middle East and North Africa, the global lender said a partial return of political stability could permit somewhat faster growth in the combined output of Egypt, Jordan, Morocco, Libya, Tunisia and Yemen during 2013.
But weak demand in Europe and other regions will weigh on the Arab Spring states, it said. In many of those countries, exports are shrinking and have not yet bottomed out, it added.
“Growth is expected to remain below long-term trends, and unemployment is expected to increase owing to continued anemic external demand, high food and fuel commodity prices, regional tensions and policy uncertainty.”
The IMF forecast GDP in the countries excluding Libya would expand by 3.6 percent next year, accelerating from an estimated 2 percent this year and 1.2 percent in 2011. In 2010, the year before the uprisings, GDP grew 4.7 percent, Reuters reported.
Inflation is expected to rise in Egypt and Morocco as they try to curb their large budget deficits by scaling back food and fuel subsidies, the IMF said.
It forecast Libya would run a huge state budget surplus of 19 percent of GDP in 2012, and a current account surplus of 22 percent.
Inflation shot up to 16 percent last year because of the civil war’s damage to factories and transport systems, but it is likely to fall to 10 percent this year as business becomes more normal and drop to just 1 percent in 2013, the IMF said.