MENA Conflicts a Setback to Region’s Development Gains

Written by Staff

As a region that has been gripped by more conflicts than any other for more than 50 years, the Middle East currently faces daunting and unprecedented challenges, which have been highlighted by the International Monetary Fund in a new report.
Conflicts in the region, particularly in Iraq, Libya, Syria, and Yemen have erased “development gains for a whole generation,” causing “deep recessions, high inflation, and damaged” institutions, the Washington, DC-based global lender said in its latest report that also analysed the economies of some 179 countries over several decades.
Nose-diving growth, soaring fiscal imbalances and decimated labour markets across the region call for newly concerted efforts from donor countries and co-ordination among humanitarian aid groups and development bodies, said the report, released ahead of a United Nations summit on the refugee crisis.
Obviously, conflicts were adversely impacting economies in the countries that have been ravaged by war and sapping growth in their neighbouring countries.
The Middle Eastern and North African countries that have been battered by turmoil have suffered average losses of 6-15 percentage points in the gross domestic product (GDP) in three years, compared to a 4-9 percentage-point average worldwide, according to the report.
The IMF report showed that the drops in economic output in Syria, oil-dependent Libya and Yemen in recent years have far exceeded the worldwide average.
International Monetary Fund Managing Director Christine Lagarde said that, while the world’s attention had been drawn to the humanitarian impact of wars, economic disasters were also unfolding.
“Much of the productive capital in conflict zones has been destroyed, personal wealth and income losses are enormous, and human capital deteriorates with the lack of jobs and education,” she said.
In its analysis, the IMF noted that after four years of civil war, Syria’s GDP has fallen by more than half, Yemen’s economy contracted by 25-35% in 2015 alone, Libya saw economic activity fall by 24% in 2014.
Conflict in the Gaza Strip and the West Bank has stalled economic growth for almost two decades, while the rest of the region advanced around 250% over the same period.
Countries bordering high-intensity conflict zone showed an average annual GDP decline of 1.4 percentage points worldwide, with a bigger drop of 1.9 percentage points in the Middle East and North Africa (Mena) region.
The IMF report has revealed the huge scale of the refugee crisis and the pressure it put on several United Nations institutions, especially the United Nations High Commissioner for Refugees (UNHCR) and the World Food Programme. The IMF report shows funding has not kept pace with the sharp increase in needs.
The IMF study says wise economic policies can limit the impact of conflict, but are difficult to implement. It says governments need to safeguard economic and social institutions, and protect human life, without drowning in debt.
The global lender maintains international institutions should offer guidance and money, and work for inclusive growth that helps avoid future conflicts.
Hence it is very important that the private sector in the region be strengthened as it can become an engine of job growth once conflicts subside.

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