Syria’s economy will shrink and oil importers across the region face “chronically high unemployment” amid social unrest and economic stagnation, the International Monetary Fund said today.
Output in Syria will contract 2 percent in 2011, the IMF said in its biannual World Economic Outlook today. In April, it had forecast 3 percent growth for the country, where 3,600 civilians have been killed by security forces during protests. Tunisia, which ousted President Zine El Abidine Ben Ali in January, won’t expand this year and oil importers in the Middle East and North Africa will grow an average 1.4 percent, accelerating to 2.6 percent in 2012, the IMF said.
“The political turmoil has seen risk premiums rise and private financing and tourism receipts fall” throughout the region, it said. “Any intensification of the political crises would exacerbate the economic plight of the region.”
Demonstrators across the Arab world this year have sought an end to oppressive rule, high food prices, social discrimination and poor job prospects. The protests also ousted rulers in Egypt and Libya, and continue to challenge them in countries including Syria and Yemen.
Egypt’s economy is forecast to grow 1.2 percent this year and 1.8 percent in 2012, the IMF said. Libya was not included in the IMF report due to continued political uncertainty.
The region’s countries should adopt economic policies that establish “strong institutions to stimulate private sector activity,” broaden access to economic opportunities and address “chronically high unemployment, particularly among the young,” the IMF said.
While higher social spending this year among the Middle East’s oil producers is stimulating their economies, it also poses inflation risks, according to the IMF. Inflation in Saudi Arabia, holder of the world’s biggest oil reserves, will stay at 5.4 percent this year, while prices in the United Arab Emirates will rise 2.5 percent, up from 0.9 percent in 2010, it said.