1 MENAP Regional Economic Outlook May 2, 217
2 Roadmap The Global Context The Outlook for the Region Key Themes What the IMF is doing to help
Global growth is gaining momentum World U.S. Euro Area Emerging markets China Russia 216 3.1 1.6 1.8 4.1 6.7 -.2 217 3.5 2.3 1.7 4.5 6.6 1.4 218 3.6 2.5 1.6 4.8 6.2 1.4 Upward revisions to growth relative to October 216 WEO are highlighted in green; downward revisions are highlighted in red. 3
Bringing firmer commodity prices but uncertainty remains high Commodity Prices (Index, 25=1) 3 World GDP Growth (Percent change) 6 25 5 2 4 15 3 1 2 5 Crude Oil (petroleum) 1/ Metals 2/ Agricultural Products 3/ 211 212 213 214 215 216 217 1 Simple average of three spot prices; Dated Brent, West Texas Intermediate, and the Dubai Fateh. 2 Includes Copper, Aluminum, Iron Ore, Tin, Nickel, Zinc, Lead, and Uranium Price Indices. 3 Includes Timber, Cotton, Wool, Rubber, and Hides Price Indices. 4 1 5 percent confidence interval 7 percent confidence interval 9 percent confidence interval 214 215 216 217 218
5 Existing stocks and new debt flows make global financial conditions a challenge Gross Public Debt (Percent of GDP & non-oil GDP for oil importers and exporters, respectively) 1 4 Interest Payments on Public Debt (Percent of revenues & non-oil revenues for oil importers and exporters, respectively) 75 3 5 2 25 1 215 215 16 17 15 15 16 1617 215 16 17 15 16 17 MENAP MENAP Oil Importers Oil Importers MENAP Oil Exporters MENAP Oil Importers MENAP Oil Exporters 5
6 Regional conflicts continue to weigh on the outlook, with an added risk of famine in Somalia and Yemen Refugees Hosted in MENAP Countries Economic Transmission Channels from Conflict 1,8 1,6 1,4 Registered refugees (in thousands, LHS) 2 12 1 Deaths, Internal Displacement and Refugees Damage to Physical Capital and Infrastructure Weakening Confidence and Security Weakening Social Cohesion and Institutional Quality 1,2 1, As a share of population (in percent, RHS) 8 In Conflict 8 6 6 4 Neighbors 4 2 2 Rest of World DJI SYR AFG MRT DZA EGY YEM IRQ SDN JOR IRN LBN PAK Greatest Effect Least Effect
7 Implications for the region? Global growth momentum represents an opportunity Prospects for key trading partners have firmed Reforms needed to diversify the economy, boost productivity, enhance competitiveness, generate employment But elevated levels of risk need further mitigation Continued focus on rebuilding buffers Address fiscal and financial vulnerabilities
Roadmap The Context The Outlook for the MENAP Region Key Themes What the IMF can do to help 8 8
9 Some pick-up in underlying growth but mediumterm prospects remain subdued Total, Oil, and Non-Oil Real GDP Growth (Percent change) 1 8 6 Contribution of Non-Oil Sector Contribution of Oil Sector Overall Growth 2-1 average overall growth 1 8 6 4 4 2 2-2 216 17 18-22 16 17 18-22 16 17 18-22 GGC+Algeria Iran MENAP Oil Importers -2
1 Some pick-up in inflation in oil importers this year, and GCC oil exporters next year Consumer Price Index (Percent change, year-on-year)
11 Roadmap The Context The Outlook for the Region Key Themes What the IMF is doing to help
Reform Types 12 Critical mass of structural reforms needed, with many common priority areas Business Environment Labor Market Fiscal Structural Reforms Infrastructure DJI, SDN, YEM DJI, MRT, SDN, YEM DJI, MRT, YEM EGY, JOR, PAK, LBN, TUN, MAR, BHR, DZA, IRN, KWT, SAU EGY, JOR, MAR, KWT, OMN, QAT, SAU EGY, JOR, PAK, LBN, TUN, MAR, BHR, DZA, IRQ, OMN, QAT, UAE, SAU LBN, BHR, IRN, IRQ, KWT, LBY Banking System AFG. MRT TUN, IRN, IRQ Capital Market Development UAE Legal System & Property Rights AFG DZA, LBY, QAT, UAE Trade Liberalization Agriculture AFG, SDN LIDC Income Level EM
Economic transformation needed to absorb new labor market entrants and reduce unemployment 13 7 6 5 4 3 2 GDP Growth and Unemployment Rate in MENAP Oil Importers (Percent) Unemployment rate (RHS) 1/ 14 13 12 11 1 Projected Labor Force Increase (Millions, cumulative) 25 25 2 2 15 15 1 1 Labor Force in 216 MENAP Oil Importers 138 million Labor Force in 216 MENAP Oil Exporters: 46 million MENAP Oil Importers 138 million MENAP Oil Exporters: 46 million MENAP Oil importers MENA Oil MENAP Oil Exporters importers MENA Oil Exporters 5 5 9 1 25 6 7 8 9 1 11 12 13 14 15 16 8 217 218 219 22 221 222 1/ Simple average for Egypt, Morocco, Pakistan, Sudan, and Tunisia.
14 Debt needs monitoring in oil exporters, but is an even more pressing priority for oil importers Public Debt (Percent of GDP) 21 216 Median Mean Inter-quartile range T Range Outliers
15 Important fiscal progress in oil exporters, but more is needed and ambitious plans need to be implemented Fiscal Balances GCC Algeria Iran Conflict Countries 215 16 17 15 16 17 15 16 17 15 16 17 1 2 4 2 Overall fiscal balance (In percent of GDP, LHS) Overall non-hydrocarbon primary balance 1 (In percent of non-hydrocarbon GDP, RHS) 6
16 Adjustment is taking place through both revenue and expenditure reforms Public Expenditures and Non-oil Revenues in Oil Exporters (In percent of Non-oil GDP) 6 5 Capital Wages Other Current Interest 4 3 2 1 215 16 17 18-22 215 16 17 18-22 Non-oil Revenues Expenditures
17 Trends in oil importers are also encouraging, but energy-subsidy gains are declining Fiscal Deficit (Percent of GDP) Change In Expenditure and Revenue (PPT change from prior year, percent of GDP) 1.8 Capital Wages Other Current Subsidies Interest.4 8. -.4 6 -.8 Overall Revenue 4 213 214 215 216 217-1.2 21-13 214-15 216 217
16 14 Lower Debt Higher Debt In oil importers, continued fiscal adjustment over the medium-term is warranted Public Debt and Fiscal Adjustment (Percent of GDP) LBN Level of public debt, 216 12 1 8 6 SDN MRT PAK MAR TUN EGY JOR 4 2 AFG Less adjustment -4-2 2 4 6 Change in primary fiscal balance, 216-22 Program countries in bold 18 More adjustment
Emerging vulnerabilities need close monitoring and, in some cases, action Private Credit Growth (Percent change, year-on-year) Non-Performing Loans (Percent of Total Loans) 25 2 GCC Non-GCC MENAP Oil Importers 14 12 1 GCC Algeria MENAP Oil Importers 15 8 1 6 4 5 2 212 13 14 15 16 212 13 14 15 16 Latest 19
2 Roadmap The Context The Outlook for the Region Key Themes What the IMF is doing to help
21 Partnering on the Reform Journey Reform is a long and complex process Needs sustained commitment Building public support is key The vulnerable need to be protected IMF is providing support Tailored program design and policy advice Technical assistance Facilitating dialogue with peers Analytical work Catalyzing support from partners
Summary of Key Messages Improved global outlook represents an opportunity, but risks remain elevated Reforms are critical to secure resilience and generate higher and more inclusive growth Fiscal adjustment continues to be needed Though pace and design will differ depending on country circumstances Financial sector vulnerabilities need to be monitored and addressed With the need to address them acute in some countries 22
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