Unemployment fuelling unrest in Arab states: IMF – World

Unemployment and slow economic growth are fueling social tension and popular protests in several Arab countries, the International Monetary Fund said on Monday.

The riots are contributing to slower growth in the Middle East and North Africa (Mena) region, along with global trade tensions, oil price volatility and a disorderly Brexit process, the IMF said in a report on regional economic perspectives.

Earlier this month, it reduced the 2019 forecast for the region, which encompasses Arab nations and Iran, to a meager 0.1 percent from 1.1 percent last year.

The IMF cut its outlook for the three largest economies in the region: Saudi Arabia, Iran and the United Arab Emirates.

The risks around the forecast earlier this month "are downward biased and depend heavily on global factors," the IMF said in its report on Monday.

"The level of growth that the countries of the region are having is below what is needed to address unemployment," said Jihad Azour, IMF director for the Middle East and Central Asia.

"We are in a region where the unemployment rate at the youth level exceeds 25-30 percent and this requires that growth be greater by 1-2 percent" to make a dent in unemployment, said Azour AFP In an interview.

The IMF report said that high unemployment was worsening social tensions in Arab countries.

"Unemployment averages 11 percent across the region compared to seven percent in other emerging markets and developing economies," he said.

"Women and young people are more likely to be unemployed, with more than 18 percent of women […] no work in 2018 ".

Since early 2010 violent protests broke out in several Arab countries and turned into bloody civil wars in Syria, Yemen and Libya.

A new wave of demonstrations broke out during the last year in Algeria, Sudan, Iraq and Lebanon, which generally demanded economic reforms and anti-corruption measures.

In Lebanon, where protesters have paralyzed the country with demands for a complete review of the political system, the economy grew at a very slow pace in recent years, Azour said.

"The government has to act firmly and quickly to address these imbalances, regain confidence in addressing the fiscal situation and reduce spending," he said.

The IMF also said public debt levels were very high in many Arab countries, exceeding on average 85 percent of gross domestic product (GDP), with rates of more than 150 percent in Lebanon and Sudan.

"After having accumulated for many years, the cost of public debt burden has become considerable, avoiding critical investments for the long-term economic future of the region," he said.

Iran flounders

The IMF said that Iran, which is subject to severe US sanctions, has entered a strong economic recession and faces a battle against spiraling inflationary pressures.

The economy of the Islamic Republic is projected to contract 9.5 percent this year after registering a negative growth of 4.8 percent in 2018.

Iranian authorities must align "the exchange rate close to the market rate and also reform the financial sector […] and try to address some of the implications of the high level of inflation, "said Azour.

As a result of the sanctions, it is believed that Tehran exports only about 500,000 barrels per day of crude oil, below more than two million bpd before the sanctions.

The IMF said the oil-rich Gulf Cooperation Council (GCC) states, led by Saudi Arabia, are expected to grow only 0.7 percent this year from 2.0 percent in 2018 due to oil prices and oil production. low.

"The GCC economies need to diversify and grow from oil and this requires that they accelerate the reforms that have begun in the last four or five years," Azour said.