Posted on February 2, 2012 by iMFdirect
By Christine Lagarde
(Version in عربي)
Tunisia, the spark that ignited the Arab Spring, was where I spent the past two days. I held official meetings with the new leaders of the country. They spoke about the Freedom and Dignity Revolution, as the Tunisians call it, and of their concerns to ensure a smooth transition to democracy and prosperity.
One year on, it is still extraordinary to think how this dramatic transformation by a grassroots movement has migrated to other countries across the Middle East and North Africa.
Alongside my official visits, I particularly enjoyed a lunch I had with a small group of women, entrepreneurs, professors, and youth activists who spoke passionately about their lives, their commitment, and their hopes for their country. (more…)
Filed under: Economic Crisis, Economic outlook, Employment, Europe, Financial Crisis, growth, IMF, Inequality, International Monetary Fund, Middle East, Public debt, recession | Tagged: Arab Spring, Christine Lagarde, IMF, iMFdirect, International Monetary Fund, mosaics, Saudi Arabia, Tunis, Tunisia | 3 Comments »
Posted on January 19, 2012 by iMFdirect
By Masood Ahmed
(Version in عربي)
The issue of how to create more jobs is high on the minds of policymakers everywhere. The economies of the six Gulf Cooperation Council (GCC) countries—Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the United Arab Emirates—are no exception.
By many measures, these economies are doing very well. Abundant oil and gas reserves are producing large budget and external surpluses, growth is up, and considerable strides have been made on social indicators.
Yet, economic activity is dominated by the oil/gas sector and—given that many GCC countries have proven reserves of at least another 50–100 years at current rates of production—will remain so. However, that sector creates relatively few jobs directly—it employs less than 3 percent of the region’s labor force.
Filed under: Employment, growth, International Monetary Fund, Middle East, عربي | Tagged: Bahrain, economic diversification, employment, GCC, Gulf Cooperation Council, IMF, iMFdirect, International Monetary Fund, jobs, Kuwait, Oman, Qatar, Saudi Arabia, unemployment, United Arab Emirates | 3 Comments »
Posted on December 7, 2010 by iMFdirect
By Masood Ahmed
(Version in عربي )
Bank credit has been very slow to pickup in the six nations of the Gulf Cooperation Council (GCC). How big a problem is this for their economic recovery?
Sluggish credit growth in the post-crisis period was hardly a unique development, as indicated in our latest Regional Economic Outlook. More than a dozen countries in the Middle East and Central Asia region, and countless more outside the region, shared this experience. But while there are clearer signs of recovery in some countries, credit to the private sector is still barely growing in the GCC, notwithstanding policy efforts to revive it.
It might seem easy to ring the alarm bells. After all, won’t the prospect of weak credit growth restrain economic activity in the short-term? Perhaps. But we believe the negative impact of credit growth may not be quite so severe.
Why not? In part, that answer lies in how we arrived at the current situation. (more…)
Filed under: Economic Crisis, Economic outlook, Middle East, عربي | Tagged: Bahrain, bank credit, capital adequacy, credit growth, credit risk, credit to the private sector, global crisis, Gulf Cooperation Council, Kuwait, Oman, Qatar, Regional Economic Outlook: Middle East and Central Asia, Saudi Arabia, U.A.E | 1 Comment »
Posted on May 25, 2010 by iMFdirect
By Masood Ahmed
In the midst of an early and uncertain economic recovery from the global crisis, countries in the Middle East and North Africa (MENA) region have been experiencing a sharp slowdown in the growth of credit to the private sector, by about 30 percentage points on average relative to precrisis peak rates.
For many sectors, firms, and households that depend on bank financing, this slowdown may be forcing them to scale back their spending plans, or to resort to scarce or costly alternative avenues for financing. Slow credit growth may therefore be constraining the strength of the recovery in the short run, in addition to limiting prospects for longer-term growth. Policymakers are understandably concerned.
Filed under: Economic Crisis, Economic research, Financial Crisis, IMF | Tagged: balance sheets, bank funding, bank profitability, capital losses, countercyclical policy, credit culture, credit demand, credit growth, Iran, Jordan, Kuwait, lending, liquidity, Morocco, nonperforming loans, private sector, Qatar, risk aversion, Saudi Arabia, supply side, UAE | 4 Comments »
Posted on October 14, 2009 by iMFdirect
By Masood Ahmed
The IMF’s latest regional economic outlook for the Middle East compares the performance of Islamic banks in the countries of the Gulf Cooperation Council (GCC) with conventional ones during the global financial crisis.
Islamic banks were less affected during the initial phase of the crisis, reflecting a stronger first-round impact on conventional banks through mark-to-market valuations on securities in 2008. But, in 2009, data for the first half of the year indicate somewhat larger declines in profitability for Islamic banks, revealing the second-round effect of the crisis on the real economy, especially real estate.
Going forward, Islamic banks overall are better poised to withstand additional stress, according to the IMF analysis.
Islamic banks have grown substantially in recent years, with their assets currently estimated at close to $850 billion. Overall, the risk profile of Islamic banks is similar to conventional banks in that the risk profile of Shariah-compliant contracts is largely similar to that in conventional contracts, and credit risk is the main risk for both types of banks.
Islamic banks are not permitted to have any direct exposure to financial derivatives or conventional financial institutions’ securities—which were hit most during the global crisis (photo: Karim Sahib/AFP/Getty Images)
Unlike conventional banks, however, Islamic banks are not permitted to have any direct exposure to financial derivatives or conventional financial institutions’ securities—which were hit most during the global crisis.
Filed under: Economic Crisis, Financial Crisis | Tagged: Bahrain, capital adequacy, financial derivatives, Gulf Cooperation Council, Islamic banking, Kuwait, Qatar, risk concentration, Saudi Arabia, Shariah, United Arab Emirates | 5 Comments »
Posted on October 11, 2009 by iMFdirect
By Masood Ahmed
Middle East oil exporters are squarely facing the worst financial crisis since the Great Depression head on. Despite the sharp drop in oil prices last year, the oil exporters rightly decided to maintain spending by drawing upon reserves amassed during the boom years.
High public spending and exceptional anticrisis financial measures have not only cushioned oil exporters’ own economies but are also contributing to sustaining global demand. They have also helped the interlinked economies of neighboring oil importers.
Facing this boom-bust cycle
Between 2004 and 2008, Middle East oil-exporting countries grew by about 6 percent a year and accumulated $1.3 trillion in foreign assets. With the striking drop in oil prices—from a peak of $147 per barrel in mid-2008 to around $30 per barrel at the beginning of 2009—the countries of the Gulf Cooperation Council (GCC) have been hardest hit. Iraq and Saudi Arabia are expected to see the most pronounced drops in oil GDP growth—8 and 15 percentage points, respectively—this year.
Despite sharp drop in oil prices last year, oil exporters rightly decided to maintain spending by drawing on reserves amassed during boom years (photo: Wathiq Khuzaie/Getty Images)
During the precrisis boom years, banks had lent substantial amounts for real estate and equity purchases and made large profits. With the onset of the crisis, asset values fell sharply and the global deleveraging led to a severe tightening of credit conditions, especially in the GCC. Banks’ balance sheets have come under pressure credit growth has slowed sharply—up to 40 percentage points in Qatar.
Filed under: Economic Crisis | Tagged: Algeria, bank financing, G-20, Iran, Iraq, Libya, oil exporters, Saudi Arabia, Sudan, Yemen | 1 Comment »