The economic repercussions of recent uprisings in the Middle East and North Africa differ from one country to another, Nesma Nowar reportsSource: IMF Having seen several uprisings, the Middle East and North Africa (MENA) region has had its inevitable share of negative economic repercussions. However, not all MENA countries witnessed the same downward economic impact. A recent study released by Western Union, the leading global money transfer company, showed that the economic ramifications of the uprisings differed across the region. This is attributed to the fact that MENA countries are different in economic structure, size of population and political and institutional frameworks. The study, conducted by Ahmed Ghoneim, professor of economics at the Faculty of Economics and Political Science at Cairo University, classified MENA countries into four groups. The first group comprises those whose main production is oil and/or natural gas: the six Gulf Cooperation Council (GCC) countries and Libya. The second group consists of countries that export oil and/or natural gas, but have more diversified economies: Egypt and Syria. The third group comprises non-oil diversified economies: Morocco, Tunisia, Lebanon and Jordan. The fourth group comprises countries heavily dependent on oil and/or natural gas exports and which have experienced domestic conflicts and have low GDP per head: Algeria, Sudan, Iraq and Yemen, and also the occupied Palestinian territories. The impact of recent events on MENA economies varied. The study shows that GCC countries have actually benefited from the turmoil. It stated that GCC members witnessed a surge in oil prices brought on by the turmoil in the region, especially after oil production in Libya was disrupted by upheaval in the country. The rise in oil prices implies growing surpluses in GCC government budgets, which enables higher public spending. This in turn would help GCC members to maintain employment levels without seeing a negative impact on the status of immigrants and remittances flows. "With the exception of Bahrain, GCC economies have not been significantly negatively affected by the flux in the region," the study stated. Bahrain has witnessed a mass uprising in February 2011 demanding greater political freedom. On the other hand, the economies of Egypt and Tunisia have been seriously affected, mainly because of mismanagement following revolutions in both countries. The study showed that all economic indicators point to the negative shock these economies suffered. Economic growth in Egypt turned negative in the last quarter of 2010/11, while in Tunisia GDP contracted by 3.3 per cent year-on-year and 7.8 per cent quarter-on-quarter in the first quarter of 2011. Unemployment in both countries has increased, owing to the return of migrant workers from Libya -- where Egyptians and Tunisians constituted the majority of the migrant worker community -- and disruption of production that has led to layoffs. The unemployment rate in Egypt increased to 11.9 per cent in the first quarter of 2011, compared with 8.9 per cent in the fourth quarter of 2010 and 9.1 per cent in the first quarter in 2010, with about 650,000 workers losing their jobs. Similarly, unemployment in Tunisia increased to stand at around 13 per cent. The study pointed out that mismanagement of both countries' economies has deepened the economic malaise. In Egypt, several disruptions to the financial system have taken place. These include the closure of the stock market for 55 days and the closure of banks that affected the transfer of remittances. Both Egypt and Tunisia have witnessed wide budget deficits as a result of a decline in revenue and an increase in spending in order to respond to social demands, especially unemployment which has been one of the main drivers for both revolutions. As a result, budget deficits in both countries have been widened to almost 11 per cent in Egypt and a projected nine per cent in Tunisia, from pre-crisis levels of 8.5 per cent in both cases. The rapid and substantial decline in foreign reserves in both countries is another alarming factor. Regarding countries that are currently experiencing revolution, such as Yemen, Syria and Libya, their economies are likely to be drastically affected, according to the study. "Economic losses in these countries are likely to be much higher than those experienced by Egypt and Tunisia during their revolutions." This is attributed to the fact that these countries have been in a state of turmoil for a longer time than Egypt or Tunisia. Moreover, infrastructure, especially in Yemen and Libya, has been severely hit and industrial production has been negatively affected, especially that more than 90 per cent of Libyan and Yemeni exports are fuel and minerals, activities that have been heavily disrupted. In the case of Libya, the study showed that the country's current turmoil has negative implications for the whole region through the effect it has on oil prices, migrants and remittances. The study cited that more than 70,000 Egyptians who worked in Libya have returned home, with serious implications for both the flow of remittances and the level of unemployment in Egypt. The same negative implications are expected in Tunisia, albeit with lower numbers of returned migrants and a smaller decline in remittances. It is estimated that Egyptians working in Libya contribute LE1.5 billion in terms of remittances. "Yemen and Libya will need some sort of Marshall Plan to rebuild their economies including their financial systems which were fragile even before the revolutions started," the report states. Other countries in the region, including Morocco, Jordan and Lebanon, have been negatively affected by the increase in oil prices. As net oil importers, the surge in oil prices accompanied with increased social spending has increased their budget deficits. In order to overcome such problems, the study introduces a number of policy recommendations. Most notably, the study calls for a new developmental paradigm that targets inclusive growth prioritising employment, income distribution and poverty reduction. It also calls for serious and rapid reform in financial sectors in MENA countries, including widening access to credit for small and medium-sized enterprises and addressing the issue of non-performing loans, which represents a major problem in the MENA region. The study further called upon remittance-receiving countries to define specific policies on remittances. It claims that MENA countries have historically not used remittances adequately to finance productive investments. By
