By Nemat Shafik
(Version in عربي)
What strikes you on a trip to the Middle East is that everyone is talking politics—all of the time. That had been the case in countries like Lebanon where it is a national pastime, but it is a new phenomenon in countries across North Africa and the Gulf.
Constitutions are being rewritten, political parties and youth groups are vibrant, and everyone has an opinion on current events. The older generation seems worried by the uncertainty associated with change. The young generation continues to be energized.
Need for an economic rethink
But, what I noticed during a week of travel through the region is that almost no one is talking economics, and that is a worry. Because while 2011 was a year of major transitions in the political domain, almost every economic indicator in the non-oil countries went in the wrong direction. Growth halved, unemployment rose, reserves came under pressure and deficits ballooned as governments responded to social pressures by increasing spending on wages and generalized subsidies.
New governments across the region are keen to respond to the demand for jobs and justice that brought them to power but are quickly faced with the hard reality of limited resources and powerful vested interests.
So, just as the “Arab Spring” opened a debate about politics in the Middle East, we now need an “Economic Spring” on how to rethink the region’s economic future.
Filed under: Africa, Economic Crisis, Economic outlook, Economic research, Emerging Markets, Employment, Finance, Fiscal policy, Globalization, growth, Inequality, Middle East, Politics, Public debt, عربي | Tagged: Arab Spring, Beirut, Berlin Wall, Economic Spring, Gulf, iMFdirect blog, jobs, Lebanon, MENA, Middle East, Nemat Shafik, subsidies, transition, UAB, youth | 4 Comments »