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Survey of Economic and Social Developments in the Arab Region 2012-2013

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The Survey of Economic and Social Development in the Arab Region 2012-2013 assesses the most recent economic and social developments of Arab countries, using the data that became available by the 2nd quarter of 2013. The immediate policy challenge for most of Arab countries is to create employment without relying on an expansionary fiscal and monetary policy mix. The Survey finds that several policy options are available for this policy challenge even in this highly uncertain situation surrounding the region’s socioeconomic development. In parallel to the specific policy proposals, the Survey emphasizes the importance of policy dialogue in the area of employment and more constructive regional integration framework on this subject. The revival of regional leverage along this line of reform needs be encouraged to halt the polarization by stabilizing the region’s socioeconomic development paths for all Arab countries.

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Preface

It is a well-known fact that, despite sharing common social and cultural traits, Arab countries are characterized by economic and social diversity. While efforts for Arab regional integration are not new, the difference in natural resource endowments, particularly of crude oil and natural gas, has resulted in different development paths for countries of the Arab region. In terms of per-capita wealth, the Arab region includes both one of the highest and one of the lowest. Upon this structural onset, the economies in the Arab region exhibited further polarization. Major energy exporters, namely countries of the Gulf Cooperation Council (GCC), are on a stable recovery path which has been enabled by an expansionary fiscal and monetary policy mix. Meanwhile, net energy-importing countries in other subregions – Mashreq, Maghreb and Arab Least Developed Countries (LDCs) – are struggling to stabilize their economies amid worsening foreign exchange constraints. The polarization, partly owed to political instability and social unrest, further obstructed the flow of intraregional funds from the major energy exporters of the region. The lack of confidence in intraregional business transactions resulted in the segmentation of economies in the region and the loss of regional leverage, which amplified the seriousness of unemployment throughout the region, even in GCC countries.

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