Publication: Middle East and North Africa Economic Update, April 2020: How Transparency Can Help the Middle East and North Africa
Loading...
Files in English
32,530 downloads
Date
2020-04-09
ISSN
Published
2020-04-09
Author(s)
Arezki, Rabah
Abou Harb, Amani
El-Mallakh, Nelly
Fan, Rachel Yuting
Zouaidi, Marwane
Editor(s)
Abstract
Due to the dual shocks of the spread of the virus and lower oil prices, World Bank economists expect output of MENA to decline in 2020. This is in sharp contrast to the growth forecast of 2.6 percent published in October 2019. The growth downgrade of 3.7 percentage points is arguably a measure for the costs associated with the dual shocks of Covid-19 and the oil price collapse. These numbers are tentative. The true impact depends on future developments of the dual shocks, policy and society’s response, which depends on the transparent use of health and economic data. We recommend a two-step approach: It might be desirable to focus first on responding to the health emergency and the associated economic contraction. Fiscal consolidation and structural reforms associated with the persistent drop in oil prices and pre-existing challenges are also very important, but with proper external support, can wait until the health emergency subsides. Nevertheless, the MENA region has challenges that predate the crisis – it has been growing far slower than its peers. Had MENA’s growth of output per capita been the same as that of a typical peer economy over the past two decades, the region’s real output per capita would be at least 20% higher than what it is today. A large part of MENA’s low growth is arguably due to a lack of transparency. MENA is the only region that dropped in data transparency and capacity since 2005. We estimate that this has cost MENA 7-14 percent in GDP per capita losses since 2005. Lack of transparency hinders credible analyses of many important issues, two of which are highlighted in the report. First, lack of data transparency hampers credible analyses on the region’s debt sustainability – an important issue to examine after the crisis. MENA countries vary greatly in their debt reporting standards. World Bank economists and other external analysts do not have access to vital information about many types of public debt. Second, the unemployment and informality numbers in the region are debatable since MENA countries rely on varying definitions of employment with little harmonization across the region or with respect to international standards. This affects analyses of unemployment and informality.
Link to Data Set
Citation
“Arezki, Rabah; Lederman, Daniel; Abou Harb, Amani; El-Mallakh, Nelly; Fan, Rachel Yuting; Islam, Asif; Nguyen, Ha; Zouaidi, Marwane. 2020. Middle East and North Africa Economic Update, April 2020: How Transparency Can Help the Middle East and North Africa. © World Bank. http://hdl.handle.net/10986/33475 License: CC BY 3.0 IGO.”
Associated URLs
Associated content
Other publications in this report series
Journal
Journal Volume
Journal Issue
Citations
Related items
Showing items related by metadata.
Publication Middle East and North Africa Economic Update, April 2019(Washington, DC: World Bank, 2019-04)World Bank economists expect economic growth in the Middle East and North Africa (MENA) to continue at a modest pace of about 1.5 to 3.5 percent during 2019-2021, with some laggards and a few emerging growth stars. In late 2018, The World Bank called on the leaders of the Middle East and North Africa (MENA) to aim high. We called for a set of aspirational, but attainable, goals in the digital-economy space (Arezki and Belhaj 2018). If the economies of MENA achieve those goals, they will not only have leapfrogged many advanced economies in terms of coverage and quality of cellular and broadband services, they will register notable advancements in digital payments. This installment of the Middle East Economic Update series, published every six months by the MENA Office of the Chief Economist, makes a more subtle point about a slow moving emerging challenge for the region’s economies: reducing macroeconomic vulnerabilities in some economies is inextricably linked to an all-out effort to create an advanced digital economy (the so-called Digital Moonshot) and other structural reforms. The link, surprisingly, is aggregate labor productivity.Publication Middle East and North Africa Economic Update, October 2019(Washington, DC: World Bank, 2019-10-09)Part I of this report discusses the short- and medium-term growth prospects for countries in the Middle East and North Africa (MENA). The region is expected to grow at a subdued rate of 0.6 percent in 2019, rising to 2.6 percent in 2020 and 2.9 percent in 2021. The growth forecast for 2019 is revised down by 0.8 percentage points from the April 2019 projection. MENA’s economic outlook is subject to substantial downside risks—most notably, intensified global economic headwinds and rising geopolitical tensions. Part II argues that promoting fair competition is key for MENA countries to complete the transition from an administered to a market economy. Part II first examines current competition policies in MENA countries and to promote fair competition calls for strengthening competition law and enforcement agencies. It also calls for corporatizing state-owned enterprises, promoting the private sector and creating a level-playing field between them. Any moves to reform MENA economies would be aided by professional management of public assets, which could tap into a new source of national wealth.Publication Living with Debt(Washington, DC: World Bank, 2021-04-02)Economies in the Middle East and North Africa (MENA) remain in crisis. The World Bank estimates the regional output to have contracted 3.8 percent in 2020 and expects it to rebound by only 2.2 percent in 2021. The regional output is expected to be 7.2% below where it would be in 2021 without the pandemic. The region’s average GDP per capita is estimated to have declined 5.3 percent in 2020 and expected to rebound by only 0.6 percent in 2021. The number of poor people in the region—those making less than the $5.50 per day poverty line—is expected to increase from 176 million in 2019 to a conservative estimate of 192 million people by the end of 2021. The region’s public debt is expected to rise significantly. Most notably, MENA oil importers have the highest levels of debt. As the region copes with the economic consequences of the pandemic, most countries will face tensions between short-term needs and the long-term risks of debt-financed government spending. Countries must make tough choices along the road to recovery. During the pandemic, fiscal spending is arguably best used to support vulnerable families and invest in public health—such as disease surveillance, data transparency, and vaccinations. Public health investment as a short-term response to the pandemic could also bring long-term gains. As the pandemic subsides, there are good reasons to be cautious with additional fiscal stimulus, especially for countries with high debt, poor governance, and lack of transparency. After the pandemic, economic growth remains the most sustainable way to reduce the debt-GDP ratio, and this requires much-needed deep structural reforms. Strong institutions can chart a path to recovery. Investing in testing, disease surveillance, and data transparency can reduce the economic costs of the pandemic. As the pandemic subsides, effective and transparent pandemic surveillance would help boost demand from domestic and foreign sources. Good governance in public investment decisions can raise the effectiveness of public investment. Public debt transparency can help reduce borrowing costs. Institutional reforms can be implemented with limited fiscal costs and hold the promise of boosting long-run growth.Publication Middle East and North Africa Economic Monitor, April 2018(Washington, DC: World Bank, 2018-04-16)After a sharp fall in 2017, economic growth in MENA is projected to rebound to 3.1 percent in 2018, thanks to the positive global outlook, oil prices stabilizing at relatively higher levels, stabilization policies and reforms, and recovery and reconstruction as conflicts recede. The outlook for MENA remains positive, and the growth rebound is expected to gain momentum over the next two years, exceeding 3 percent in 2020. While stabilization policies have helped economies adjust in recent years, .a second phase of reforms is needed should be transformative if the region is to reach its potential and create jobs for hundred million young people who will enter the labor market in coming decades. In this report, we explore the role that public-private partnerships can play. not only in providing an alternative source of financing but in helping change the role of the state from the main provider of employment to an enabler of private sector activity. Studies have shown that the gap between MENA economies and fast-growing ones is the performance of the services sector. The disruptive technology offers new opportunities for boosting private-sector-led growth through enhancement of high-tech jobs in the services sector. The report argues that combining the region's fast-growing pool of university graduates and a heavy penetration of social media and smartphone, could serve as the foundation for a digital sector that could create much-needed private sector jobs for the youth over the next decade.Publication Middle East and North Africa Economic Monitor, October 2018(Washington, DC: World Bank, 2018-10)Growth in the Middle East and North Africa (MENA) region is projected to rebound to an average of 2% in 2018, up from an average 1.4% in 2017. The modest rebound in growth is driven mostly by the recent rise in oil prices, which has benefitted the region’s oil exporters while putting pressure on the budgets of oil importers. The rebound also reflects the impact of modest reforms and stabilization efforts undertaken in some countries in the region. The report forecasts that regional growth will continue to improve modestly, to an average of 2.8% by the end of 2020 while there is the ongoing risk that instability in the region could worsen and dampen growth. Despite recovery, the slow pace of growth will not generate enough jobs for the region’s large youth population. New drivers of growth are needed to reach the level of job creation required. The report offers a roadmap for unlocking the enormous potential of the region’s large and well-educated youth population by embracing the new digital economy. Broader and bolder reforms will be needed to achieve this goal, along with critical investments in digital infrastructure. It will require the reorientation of education systems toward science and technology, the creation of modern telecommunications and payments systems, and a private-sector driven economy governed by regulations that encourage rather than stifle innovation.
Users also downloaded
Showing related downloaded files
Publication World Development Report 2018(Washington, DC: World Bank, 2018)Every year, the World Bank's World Development Report takes on a topic of central importance to global development. The 2018 Report, Learning to Realize Education's Promise, is the first ever devoted entirely to education. Now is an excellent time for it: education has long been critical for human welfare, but is even more so in a time of rapid economic change. The Report explores four main themes. First, education's promise: Education is a powerful instrument for eradicating poverty and promoting shared prosperity, but fulfilling its potential requires better policies - both within and outside the education system. Second, the learning crisis: Despite gains in education access, recent learning assessments show that many young people around the world, especially from poor families, are leaving school unequipped with even the most foundational skills they need for life. At the same time, internationally comparable learning assessments show that skills in many middle-income countries lag far behind what those countries aspire to. Third, promising interventions to improve learning: Research from areas such as brain science, pedagogical innovations, or school management have identified interventions that promote learning by ensuring that learners are prepared, that teachers are skilled as well as motivated, and that other inputs support the teacher-learner relationship. Fourth, learning at scale: Achieving learning throughout an education system will require more than just scaling up effective interventions. Change requires overcoming technical and political barriers by deploying salient metrics for mobilizing actors and tracking progress, building coalitions for learning, and being adaptive when implementing programs.Publication An Investment Framework for Nutrition(Washington, DC: World Bank, 2017-04-12)The report estimates the costs, impacts and financing scenarios to achieve the World Health Assembly global nutrition targets for stunting, anemia in women, exclusive breastfeeding and the scaling up of the treatment of severe wasting among young children. To reach these four targets, the world needs $70 billion over 10 years to invest in high-impact nutrition-specific interventions. This investment would have enormous benefits: 65 million cases of stunting and 265 million cases of anemia in women would be prevented in 2025 as compared with the 2015 baseline. In addition, at least 91 million more children would be treated for severe wasting and 105 million additional babies would be exclusively breastfed during the first six months of life over 10 years. Altogether, achieving these targets would avert at least 3.7 million child deaths. Every dollar invested in this package of interventions would yield between $4 and $35 in economic returns, making investing in early nutrition one of the best value-for-money development actions. Although some of the targets—especially those for reducing stunting in children and anemia in women—are ambitious and will require concerted efforts in financing, scale-up, and sustained commitment, recent experience from several countries suggests that meeting these targets is feasible. These investments in the critical 1000 day window of early childhood are inalienable and portable and will pay lifelong dividends – not only for children directly affected but also for us all in the form of more robust societies – that will drive future economies.Publication World Development Report 2021(Washington, DC: World Bank, 2021-03-24)Today’s unprecedented growth of data and their ubiquity in our lives are signs that the data revolution is transforming the world. And yet much of the value of data remains untapped. Data collected for one purpose have the potential to generate economic and social value in applications far beyond those originally anticipated. But many barriers stand in the way, ranging from misaligned incentives and incompatible data systems to a fundamental lack of trust. World Development Report 2021: Data for Better Lives explores the tremendous potential of the changing data landscape to improve the lives of poor people, while also acknowledging its potential to open back doors that can harm individuals, businesses, and societies. To address this tension between the helpful and harmful potential of data, this Report calls for a new social contract that enables the use and reuse of data to create economic and social value, ensures equitable access to that value, and fosters trust that data will not be misused in harmful ways. This Report begins by assessing how better use and reuse of data can enhance the design of public policies, programs, and service delivery, as well as improve market efficiency and job creation through private sector growth. Because better data governance is key to realizing this value, the Report then looks at how infrastructure policy, data regulation, economic policies, and institutional capabilities enable the sharing of data for their economic and social benefits, while safeguarding against harmful outcomes. The Report concludes by pulling together the pieces and offering an aspirational vision of an integrated national data system that would deliver on the promise of producing high-quality data and making them accessible in a way that promotes their safe use and reuse. By examining these opportunities and challenges, the Report shows how data can benefit the lives of all people, but particularly poor people in low- and middle-income countries.Publication Finance and Prosperity 2024(Washington, DC: World Bank, 2024-08-29)While financial sector risks in the larger and higher per capita countries are moderate, half of lower-income countries face significant risks over the next 12 months. Nearly 70 percent of countries facing high financial sector risks are currently not adequately prepared to handle financial stress. The report also identifies a particular risk facing financial sectors in several countries: a large and growing exposure to sovereign debt. This exposure surged to its highest level in the past decade. Finally, the report looks at how countries can enable more climate finance through the banking sector without compromising on the important goals of financial sector stability and inclusion for underserved people.Publication World Development Report 2017(Washington, DC: World Bank, 2017-01-30)Why are carefully designed, sensible policies too often not adopted or implemented? When they are, why do they often fail to generate development outcomes such as security, growth, and equity? And why do some bad policies endure? This book addresses these fundamental questions, which are at the heart of development. Policy making and policy implementation do not occur in a vacuum. Rather, they take place in complex political and social settings, in which individuals and groups with unequal power interact within changing rules as they pursue conflicting interests. The process of these interactions is what this Report calls governance, and the space in which these interactions take place, the policy arena. The capacity of actors to commit and their willingness to cooperate and coordinate to achieve socially desirable goals are what matter for effectiveness. However, who bargains, who is excluded, and what barriers block entry to the policy arena determine the selection and implementation of policies and, consequently, their impact on development outcomes. Exclusion, capture, and clientelism are manifestations of power asymmetries that lead to failures to achieve security, growth, and equity. The distribution of power in society is partly determined by history. Yet, there is room for positive change. This Report reveals that governance can mitigate, even overcome, power asymmetries to bring about more effective policy interventions that achieve sustainable improvements in security, growth, and equity. This happens by shifting the incentives of those with power, reshaping their preferences in favor of good outcomes, and taking into account the interests of previously excluded participants. These changes can come about through bargains among elites and greater citizen engagement, as well as by international actors supporting rules that strengthen coalitions for reform.