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Huge unemployment rates responsible for current wave of Middle East unrest, says IMF

Protests against dire economic conditions have crippled Middle East and North Africa. [Getty]

Date of publication: 28 October, 2019

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Unemployment averages 11 percent across the region, according to the IMF.
Popular protests and social tensions in several Arab countries are being fueled by unemployment and sluggish economic growth, the International Monetary Fund (IMF) said on Monday.

The unrest, combined with global trade tensions, the volatility of oil prices and uncertainty surrounding Brexit are in turn contributing to slower growth in the Middle East and North Africa (MENA) region.

Unemployment, the IMF said, was the reason for worsening social tensions in the countries in this region.

"Unemployment averages 11 percent throughout the region versus 7 percent across other emerging markets and developing economies," it said in the report.

"Women and young people are particularly likely to be out of work, with more than 18 percent of women... without jobs in 2018."

[also read: Yemen in Focus: UAE wants its $100 million Aden power station back]

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

"We are in a region where the rate of unemployment at the youth level exceeds 25-30 percent and this requires growth to be higher by 1-2 percent,” he added.

Widespread protests have broken out in several Arab countries in 2010 and have since turned brutal and many of them, most notably in Syria, Libya and Yemen.

A new set of demonstrations, called the second wave of the Arab Spring, broke out over the past year with protestors taking to the streets in Algeria, Sudan, Iraq and Lebanon, typically demanding economic reform and action against corruption.

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

The oil effect

The IMF's report added that Iran, which has been subject to crippling US sanctions for several years, has entered a steep economic recession.

Iran's economy is projected to contract by a further 9.5 percent this year after posting negative growth of 4.8 percent in 2018.

Azour said that the Iranian government 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".

The sanctions have forced iran to only export around 500,000 barrels of oil per day, significantly lower than the over two million barrels per day before the sanctions took effect.

The oil rich Gulf Cooperation Council (GCC) countries, including Saudi Arabia, the United Arab Emirates, Kuwait, Oman, Bahrain and Qatar, are also expected to see a decline in growth due to the volatility of oil prices and output.

Azour recommended that these states diversify their economies and implement the reforms of the last few years at a faster rate to make them less dependent on their prized export.


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