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Survey of economic and social developments in the Arab region 2013-2014

image of Survey of economic and social developments in the Arab region 2013-2014
The Arab region saw slower economic growth in 2013, mainly because of the moderate growth of major oil-exporting countries, represented by the member countries of Gulf Cooperation Council. While GCC countries are on a stable recovery path, the polarization of economic performance among Arab countries continues between GCC and other Arab countries. The political, security and humanitarian crisis in Iraq, Libya, Palestine and the Syrian Arab Republic deepened, impacting the region negatively, now increasingly being viewed as fragile and chaotic despite its vast natural resources. This report discusses the issue of current financing gaps, estimates conceptual financing gaps to achieve full employment, and concludes with a set of policy recommendations. As outlined in the report, regional integration has the greatest potential to unlock financial resource mobilization and diversification, and should be utilized as a tool for economic and social transformation across the Arab region.

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The global context and its implications for the Arab region

Defying pessimistic overviews at the start of 2013 that warned of a possible double-dip recession, the world economy showed that it was on a stable recovery path during 2013, and robust economic recovery was observed in developed countries. The United States of America saw a resilient economic expansion despite a decrease in federal government spending. The active financial sector, recovering from the global financial crisis of 2008, led the growth of the private sector and cushioned the impact of ongoing fiscal tightening. The economic recovery in Europe was also gaining ground. According to an assessment by the European Commission, macroeconomic imbalances, which posed major economic risks to European Union member countries, were gradually receding. The risk premium of the government debts of southern European countries decreased, as the risk of a systemic financial crisis abated after the financial insolvency crisis in Cyprus was resolved without international repercussions. Japan renewed its quantitative easing monetary policy, which buoyed its domestic demand and supported the recovery of economic sentiment that had been significantly weakened by the Tohoku Earthquake in 2011. Improved price competitiveness through a significant devaluation of the Japanese yen led a recovery in corporate earnings. The improvement of economic sentiment in developed countries increasingly contributed to the expansion of the world economy in 2013, and this trend is projected to continue in 2014 and 2015 (table 1).

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