Gulf Cooperation Council (GCC) countries are on course to maintain a strong economic growth exceeding five per cent in 2011, the World Bank said in its latest forecast.
However, the wider Middle East and North Africa region may face a slower growth of 3.6 per cent as the soaring fuel and commodity prices stoke inflation , the World Bank report on “Regional Economic Outlook: Mena Facing Challenges and Opportunities” said.
Revising downwards the growth forecast for the Mena region, the World Bank said current economic disruption in many countries in the region is translating into lower growth at 3.6 per cent for 2011, down from five percent previously, in the short-term.
However, the opportunities in the medium-term offer new hope for an inclusive and sustainable development that has not before been seen in the region.
It added that there are “historic opportunities for greater openness and citizen participation in economies across the Middle East and North Africa that, if strongly managed over the transitions ahead, could see a significant boost to economic growth and living standards in the medium term,” World Bank Vice-President (Mena region) Shamshad Akhtar said.
Government spending in the region is expected to rise in 2011, as governments move to expanding supportive policy measures and social transfers to reduce the burden of unemployment and counter high commodity prices, the report said.
The bank added that the region had largely recovered from the global financial crisis, and growth rates had been expected to reach pre-crisis levels in 2011.
“Events in early 2011, which led to swift regime change in Tunisia and Egypt, and ongoing challenges in Bahrain, Libya, Syria and Yemen, have affected the short-term macro economic outlook and the status and speed of economic reforms in the region,” it said.
“The effects of reform tend to follow a J-curve, where things get worse before they get better. Experience from other countries which have made successful transitions has shown an initial decline of 3-4 per cent in the first year but quickly recovering,” Chief Economist for the Mena region Caroline Freund said.
