No Result
View All Result
Saturday, June 14, 2025
23 °c
Tripoli
24 ° Sat
24 ° Sun
  • Advertising
  • Contact
LibyaHerald
  • Home
  • Libya
  • Business
  • Opinion
  • Magazine
  • Advertising
  • Login
  • Register
SUBSCRIBE
  • Home
  • Libya
  • Business
  • Opinion
  • Magazine
  • Advertising
  • Login
  • Register
No Result
View All Result
LibyaHerald
No Result
View All Result
Home Business

World Bank MENA Regional Economic Update optimistic on Libya’s prospects

bySami Zaptia
April 13, 2014
Reading Time: 5 mins read
A A
World Bank MENA Regional Economic Update optimistic on Libya’s prospects

The World Bank Update is optimistic about Libya's economic fortunes.

By Sami Zaptia

The World Bank Update is optimistic about Libya's economic fortunes.
The World Bank’s April 2014 MENA Regional Economic Update says that the 2014 global recovery will benefit Libya’s economy.

Tripoli, 10 April 2014:

The World Bank’s MENA Regional Economic Update, April 2014, released Tuesday, entitled “Harnessing the Global Recovery . . .[restrict]- A Tough Road Ahead”, says that the global economy is set for a rebound in 2014 benefiting the MENA region.

“Compared with the previous three years, 2014 seems hopeful and 2015 could be a turning point for the countries in the Middle East and North Africa (MENA) region”, the report forecast. Many countries in MENA will start to benefit from stronger external demand in the high-income economies, as the global economy is set for a rebound in 2014.

In addition to growth expansion in the United States, the United Kingdom as well as a modest recovery in Euro zone countries, global growth would continue to be driven by growth in developing countries, expected to be about 5.3 and 5.5 percent in 2014 and 2015 respectively, led by China and India.

RELATED POSTS

Libya’s financial stability hinges on disciplined fiscal management and strategic investment: Husni Bey

Op-Ed: Libya’s Missing Link – Why Data is the Key to Reform While Preventing a Public Backlash

The MENA Region

Specifically on the MENA region, the report says that “after three years of slowdown, economic performance in the MENA region is expected to improve in 2014 but growth will remain below the average for 2000-2010. Growth in MENA will reach 3.3 percent in 2014 and further accelerate to 4.6 percent in 2015.

The oil exporters in MENA, especially the GCC countries, are expected to lead the regional recovery with growth reaching 3.5 percent in 2014 and 4.8 percent in 2015.

“Growth in developing oil exporters including Iran, Iraq, Algeria, Libya and Yemen”, the report continues, “is expected to rebound but will remain below the pre-Arab-Spring levels.

Real GDP growth in this group of countries is expected to reach 6.8 percent in 2015, from negative 0.7 in 2013”. Libya Real GDP Growth (%)

2011 2012 2013e 2014p 2015p
-62.1 104.5 -9.4 -9.7 28.8

e = estimate p= projected Source: The World Bank’s MENA Regional Economic Update, April 2014

Positive advances in the political climate of the transition countries could likely set the stage for gradual improvements in the economic prospects, provided the necessary reforms are advanced, the World Bank reports.

Risk to the outlook for an economic recovery

The report, however, points out a number of risks to this recovery.

“Large fiscal spending has made these countries vulnerable to negative oil price shocks, however. The IMF estimates that most of these countries need an oil price higher than $90 per barrel (p/b) to balance their budget. An adverse scenario in which oil prices decline to $90 p/b could increase fiscal pressures.

“Political tensions are expected to gradually subside in Yemen and Libya and growth could be higher in 2015 compared to the previous year. Growth recovery in Yemen would be mainly driven by non-oil sectors. In Libya, however, insurgencies in the oil fields have been holding back oil production, a major contributor to output and fiscal revenue”.

Overdue structural problems will remain unresolved

Moreover, the World Bank report says that the biggest risk to the outlook for an economic recovery in MENA is that “overdue structural problems will remain unresolved. MENA countries share many structural problems that have been preventing their economies from moving to a higher and sustainable growth path. They have long suffered from high unemployment, low labor force participation rates particularly among women, and the sluggish rates of job-creating growth.

Regional unemployment is high

“The regional unemployment rate is about 11 percent. The rate is much higher for those under 24, exceeding 50 percent in Yemen and Libya.

“Job markets in almost all countries in MENA are segmented with a sharp division between the protected and the excluded. Burdensome regulations put new and small firms at a disadvantage. Labor markets are skewed toward public sector jobs which offer attractive benefits and wages resulting in high wage expectations among job seekers and university graduates.

“Corruption is prevalent in almost all countries in the MENA region and common particularly in public sector hiring. A recent survey in Tunisia showed that 8 out of 10 think that Wasta or connections are critical to getting a job in the public sector.

“Estimates from the World Bank show that over the next 7 years (between 2014-2020) the region must create about 28 million jobs just to keep the unemployment rate from rising). This translates into creating 4 million jobs per year. Prior to the 2011 revolutions, the region historically created about 3.5 million jobs per year with an average GDP growth rate of 5 percent.

]”The slowdown in economic activity in the transition countries post-Arab Spring (2011-13) and the spillovers to neighboring countries have been holding back output resulting in growth averaging about 2-3 percent. Under the scenario of a continued slowdown in economic activity, the average unemployment rate in the region will increase substantially, with youth and females being affected the most.”

Lack of economic diversification

The lack of economic diversification has largely contributed to growth volatility in the MENA region.

Oil exporters rely primarily on only one export commodity (oil) and oil importing countries lack multiple trading partners. For example, France is the major trading partner of Tunisia and Morocco.

Many governments have tried to diversify their exports, with limited success. A recent World Bank study (2013) suggests that, for resource-rich countries, a better strategy is to diversify their accumulated wealth instead of their exports. In the process of diversification, governments need to invest the rents from natural capital (resources) in physical and “intangible” capital, which includes education, innovation and strong institutions that foster competition, rather than simply subsidizing particular industries. Such a strategy will better prepare the economy for the post-oil era.

Large civil-service wage bill and general subsidies

Fiscal spending in almost all of the countries in MENA is dominated by a large civil-service wage bill and general subsidies, both of which have been on the rise following the Arab Spring, mainly to prevent further social discontent.Especially in the oil importers, this has reduced the fiscal space for capital spending and investment in infrastructure, lowering the prospects of higher growth in these countries.

Higher current spending together with lower revenues have increased fiscal deficits and public debt, making countries vulnerable to even slightly economic shocks. General subsides in Libya (estimated at 11 percent of GDP in 2013) and Yemen (9 percent of GDP in 2012) exceeds government spending on education and health.

Tapping into foreign reserves

Weak private sector activity, low levels of external financing together with fiscal pressures have forced the governments to resort to their foreign reserves or increase public debt.

Foreign reserves in Egypt and Tunisia now cover only four months of imports. Governments in oil rich countries including Libya and Iran have also been tapping into their large foreign reserves. Yemen’s foreign reserves are estimated to cover only three months of imports in 2015.

“Libya’s reserves have also dropped to about $100 billion in 2014 and are expected to decline further to $82 billion in 2015 from $122 billion in 2013 when the government started running budget deficits”, reports the World Bank update. [/restrict]

Tags: deficitdiversificationeconomyfeaturedgrowthMENAMiddle East North AfricasubsidiessurplusunemploymentWorld Bank

Related Posts

Nearly 11,000 migrants repatriated from Libya and 3,165 Mediterranean fatalities: IOM
Business

IOM delivers training to over 180 Libyan youth

June 12, 2025
GNU to take oath at Benghazi HoR session and budget to be approved at Tripoli session: GNU
Business

Aldabaiba stresses need to complete Airport Road works in full in conjunction with imminent opening of Tripoli International Airport

June 12, 2025
Algeria exports electric vehicle charging stations to Libya
Business

Algeria seeks to facilitate the flow of Algerian goods and services to the Libyan market

June 9, 2025
Signboards for Benghazi’s new airport at Tika go up – UAE’s Global Builders/Terminals company to implement
Business

Construction work progressing at Benghazi’s new Tika airport

June 9, 2025
Boursa FinTech’s virtual Trading and Investment Competition winners announced
Business

Boursa FinTech’s virtual Trading and Investment Competition winners announced

June 9, 2025
UN Secretary General calls for stability, early elections, and critical decisions to be taken in a transparent and consensual manner
Business

Libya grapples with political instability and division, fragmented governance, and an overreliance on hydrocarbons: UN Libya study

June 9, 2025
Next Post
Interior Minister Mazig reveals that 30 percent of city security cameras are installed

Interior Minister Mazig reveals that 30 percent of city security cameras are installed

Extension of Man Made River to combat Jalu water shortages

ADVERTISEMENT

Top Stories

  • Tripoli Defence Minister Namroush takes steps to secure Tripoli after Bashagha alleged assassination attempt

    Calm returns after overnight Tripoli militia clashes – Defence Ministry says it has enforced control, warns of readiness to take measures to ensure security

    0 shares
    Share 0 Tweet 0
  • Construction work progressing at Benghazi’s new Tika airport

    0 shares
    Share 0 Tweet 0
  • Libya grapples with political instability and division, fragmented governance, and an overreliance on hydrocarbons: UN Libya study

    0 shares
    Share 0 Tweet 0
  • Boursa FinTech’s virtual Trading and Investment Competition winners announced

    0 shares
    Share 0 Tweet 0
  • Algeria seeks to facilitate the flow of Algerian goods and services to the Libyan market

    0 shares
    Share 0 Tweet 0
ADVERTISEMENT
LibyaHerald

The Libya Herald first appeared on 17 February 2012 – the first anniversary of the Libyan Revolution. Since then, it has become a favourite go-to source on news about Libya, for many in Libya and around the world, regularly attracting millions of hits.

Recent News

IOM delivers training to over 180 Libyan youth

Aldabaiba stresses need to complete Airport Road works in full in conjunction with imminent opening of Tripoli International Airport

Sitemap

  • Why subscribe?
  • Terms & Conditions
  • FAQs
  • Copyright & Intellectual Property Rights
  • Subscribe now

Newsletters

    Be the first to know latest important news & events directly to your inbox.

    Sending ...

    By signing up, I agree to our TOS and Privacy Policy.

    © 2022 LibyaHerald - Powered by Sparx Solutions.

    Welcome Back!

    Login to your account below

    Forgotten Password? Sign Up

    Create New Account!

    Fill the forms below to register

    *By registering into our website, you agree to the Terms & Conditions and Privacy Policy.
    All fields are required. Log In

    Retrieve your password

    Please enter your username or email address to reset your password.

    Log In
    No Result
    View All Result
    • Login
    • Sign Up
    • Libya
    • Business
    • Advertising
    • About us
    • BusinessEye Magazine
    • Letters
    • Features
    • Why subscribe?
    • FAQs
    • Contact

    © 2022 LibyaHerald - Powered by Sparx Solutions.

    This website uses cookies. By continuing to use this website you are giving consent to cookies being used. Visit our Privacy and Cookie Policy.