Azerbaijan, Baku, April 27 / Trend /
Political turmoil in the Middle East shows that the growth-oriented policies pursued by countries such as Tunisia and Egypt failed to meet the needs of their populations, Bloomberg reported according to the International Monetary Fund.
"The unfolding events make it clear that reforms, and even rapid economic growth as seen periodically in Tunisia and Egypt, cannot be sustained unless they create jobs for the rapidly growing labor force and are accompanied by social policies for the most vulnerable," the Washington-based IMF said in its Regional Economic Outlook for the region, published today.
The ousted rulers of Egypt and Tunisia carried out policies that were praised by the IMF and World Bank, and spurred growth. Egypt's government, starting in 2004, sold public companies and reduced subsidies to cut the budget deficit. Economic growth accelerated to 7.2 percent in 2008 from 4.1 percent in 2004.
Egypt has signaled it will seek as much as $4 billion in loans from the fund for the current fiscal year, ending in June, and the next one. Samir Radwan, the finance minister, said last week that Egypt will also seek about $2.2 billion from the World Bank. IMF loans are typically tied to the recipient government carrying out agreed policies.
Other countries to experience slowdowns in growth will include Lebanon, which has had no government since the cabinet of Prime Minister Saad Hariri collapsed Jan. 12, and Pakistan, grappling with the spillover from the war in neighboring Afghanistan and with domestic Islamic extremists, the IMF said. It forecast that Lebanon's growth will slow to 2.5 percent from 7.5 percent last year, and Pakistan's to 2.8 percent from 4.8 percent in 2010.
Growth in the Gulf Cooperation Council, which includes Saudi Arabia and the United Arab Emirates among its six members, will accelerate to 7.8 percent this year as oil prices increase and production rises "in the face of supply disruptions elsewhere," the IMF predicted.
Higher inflation rates caused by rising food and fuel prices will require the region's central banks "to pay greater attention to headline inflation," while increasing sovereign risk premiums may also push interest rates up, the fund said.