Macroeconomy

Macroeconomic performance across the Arab countries tend to diverge between major oil exporting countries in the Gulf Cooperation Council (GCC) and other countries in the region, especially those inflicted by conflict. In recent years, heightened social unrest, political uncertainty and violent armed conflicts have contributed to a pronounced deterioration in the macroeconomic performance in a handful of countries including Syria, Iraq, Somalia, Yemen, Libya, Sudan and Palestine, and given that almost 29 million people, equivalent to 7.1 percent of the population, being forcibly displaced in 2017.[1][2] With the oil price shock in 2014, several countries have had to take measures to maintain fiscal budgets under control, privatize national assets and facilitate private sector development away from the oil industry.[3] However, despite recent modest growth, fiscal deficits are slowly declining, leading to a sharp increase in government debts.

 

The Arab region is projected to register a real GDP growth of 2.8 percent in 2019, compared to 1.4 percent in 2017.[4][5] The growth rate (constant prices) amounts to negative 2.3 percent and negative 2 percent in politically-unstable Sudan and conflict-hit Yemen. Also, the spillovers of conflicts in the form of refugee influx, aside the pressures on economic infrastructures and labor markets, have limited the growth potential of countries such as Lebanon and Jordan, limiting their growth to 1.3 percent and 2.2 percent, respectively. For the GCC countries, the drop in international oil prices starting mid-2014 have weighed heavily on their economic outlook, with real GDP growth ranging between 1.1 percent in Oman and 1.8 percent in Saudi Arabia to 2.5 percent in Kuwait and 2.9 percent in UAE in 2019. On the other hand, opportunities of economic growth persist in Djibouti (6.7 percent), Mauritania (6.4 percent) and Egypt (5.5 percent).[6]

 

Following a temporary rise in 2017 and 2018, regional inflation has declined to 4.9 percent[4], down from 6.9 percent in 2017; high inflation values are registered in Sudan (50 percent), Yemen (20 percent), Mauritania (15 percent), and Egypt (14.5 percent).[6]

 

For the Arab region, the GDP (Purchasing Power Parity, constant 2011 prices) leveled at Int$ 6,400 billion in 2017, constituting 5.5 percent of the world’s GDP. While the GDP in Saudi Arabia reached Int$ 1,613 billion, the highest in the Arab region, it amounted to Int$ 2 billion in Comoros. The Gross National Income (GNI) per capita (Purchasing Power Parity) averaged at Int$ 17,002 in 2017, almost equal to the world average of Int$ 17,043, and with the highest value, of Int$ 128,320, recorded in Qatar.[7]


In regard to the fiscal balance, the Arab region has registered a deficit of 4.8 percent, compared to 11.4 percent in 2016. Except for Kuwait (a surplus of 9.5 percent of GDP), Qatar (a surplus of 6.1 percent of GDP) and Mauritania (a surplus of 0.6 percent of GDP), all Arab countries have registered a deficit in their balances, with Lebanon and Libya topping the list at 11.7 percent and 10.9 percent of GDP, respectively.[6] With the rise in oil revenues starting 2017, the fiscal deficit has declined to 3.1 percent of GDP, down from 10.7 percent in 2016.[4]

 

Government revenues, as a percentage of GDP, come highest in conflict-ravaged Libya at 81.4 percent and Kuwait at 59.9 percent. On the other hand, government expenditures, as a percentage of GDP, are also the highest in Libya at 92.3 percent, followed by Kuwait at 50.4 percent.[6] In general, the biggest component of expenditures is channeled towards the wage bill of public sector employees, ranging from more than one-fifth of total expenditures in Oman and Lebanon (23.6 percent and 24.3 percent, respectively), up to 53.8 percent of total expenditures in Palestine according to latest available data.[7]


In tandem with the rising budget deficits, the level of public debt has been rising in many Arab countries, with debt management becoming an increasingly important priority for the governments in the region. Recent estimates point out that 10 out of 18 Arab countries have registered a government debt-to-GDP ratio above 60 percent. Sudan registered the highest government gross debt at 177.9 percent of GDP, followed by Lebanon and Jordan (157.8 percent and 100.2 percent of GDP).[7]

 

 

This overview has been updated by the ADP team based on latest available data as of May 2019.

 



Sources and footnotes:


[1] The UN Refugee Agency (UNHCR). 2019. Population Statistics. [ONLINE] Available at: http://popstats.unhcr.org/en/persons_of_concern accessed 20-May-2019 [Accessed 22 May 2019].
[2] For Palestinian refugees, figures were extracted from the United Nations Relief and Works Agency (UNRWA). [ONLINE] Available at: https://www.unrwa.org/ [Accessed 22 May 2019].
[3] World Economic Forum (WEF). 2017. The New Economic Context for the Arab World. [ONLINE] Available at: http://www3.weforum.org/docs/WEF_The_New_Economic_Context_Arab_World_flyers_2017.pdf [Accessed 22 May 2019].
[4] International Monetary Fund (IMF). April 2019. Regional Economic Outlook Update: Middle East, Afghanistan, and Pakistan. [ONLINE] Available at: https://www.imf.org/en/Publications/REO/MECA/Issues/2019/04/17/reo-menap-cca-0419 [Accessed 22 May 2019].
[5] The Arab region includes 20 countries: Algeria, Bahrain, Djibouti, Egypt, Iraq, Jordan, Kuwait, Lebanon, Libya, Mauritania, Morocco, Oman, Qatar, Saudi Arabia, Somalia, Sudan, Syria, Tunisia, United Arab Emirates, and Yemen.
[6] International Monetary Fund (IMF). April 2019. World Economic Outlook (WEO). [ONLINE] Available at: https://www.imf.org/external/pubs/ft/weo/2019/01/weodata/index.aspx [Accessed 22 May 2019].
[7] The World Bank. April 2019.  World Development Indicators (WDI). [ONLINE] Available at: https://databank.worldbank.org/data/reports.aspx?source=world-development-indicators [Accessed 22 May 2017].

 



Macroeconomy Statistical Snapshot 2018
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Data Highlighted

  • The Gross Domestic Product per capita, purchasing power parity (current international dollars), of the Arab countries

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Publications