Mideast, N. Africa economy doing well in first half

12:22, June 16, 2010      

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As the world's economy recovers and oil prices stand at higher levels, the economy in the Middle East and North African region has been doing well on the whole in the first half of the year.

Despite the impact of the global financial crisis, the economy of countries like Egypt, Libya, Algeria, Tunisia, Morocco, Syria and Lebanon is better than expected, analysts say.

Thanks to the economic stimulus plans, banking reforms including the application of banking safety criteria by the Central Bank of Egypt to avoid bad loans, Egypt seems to have successfully mitigated the impact of the international crisis.

Egypt's economy grew 4.7 percent year-on-year in the 2008-2009 fiscal year, which ends in June 2009, and is expected to reap a 5 percent to 6 percent growth in the current fiscal year ending in June. The goal for the next year is 6 percent.

"Egyptian economy is positive as the flow of tourists, the real estate sector, the Suez Canal revenues and information technology industry have reported growth," said Gamal Bayoumi, secretary general of the Arab Investors Union.

Revenue from the Suez Canal reached 395 million U.S. dollars in May, up 15 percent from the same period last year. The income was the highest since last November when the global economic slump affected the traffic volume of the waterway. The canal has been one of the major sources of income for Egypt.

Meanwhile, the economy of the Gulf countries is also growing, although some areas still face a linger impact of a crisis in the real estate sector.

According to estimates, the economic growth rate of Saudi Arabia will reach 3.5 percent to 4 percent this year, compared with 0.15 percent in 2009. The country's non-oil sector is also expected to see a 3.8 percent growth.

The International Monetary Fund (IMF) forecast last month the Middle East and North Africa region to see a 4.2 percent growth this year and 4.6 percent in 2011. The region's oil sector will grow 4.3 percent in 2010 and 3.2 percent 2011.

The IMF said strong oil demand indicated a promising outlook but challenges from banking system stress and low credit growth also remain.

The oil prices have risen and currently roam around 70 dollars. Oil sector has contributed a lot to the economic growth of oil- exporters in the region.

However, impoverished countries like Djibouti, Comoros, Mauritania and Somalia, are still struggling to achieve growth. Oil is considered a tool of accumulating wealth and fund reserves. But oil producers in the region should stop counting on the oil as the only source of wealth, analysts say.

Large fund reserves in some Arab countries can be used to invest in their own lands for better economic performance, said Bayoumi.

The Arab countries should boost production in various sectors to improve their trade structure. Currently, oil accounts for more than 70 percent of Arab exports, while 70 percent of their imported goods are from other regions, according to Bayoumi.

"The Arab economy is strong on the whole, but it has not reached the desired levels matching growth capabilities," added the analyst. He expected the regional economy would continue to improve by the end of the year.

Source: Xinhua


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