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Oil-exporting states in the Middle East will lead economic growth in the region, where pro-democracy uprisings have been pushing for political changes over the past nine months, according to the International Monetary Fund (IMF) on Tuesday.
Despite scattered protests in both Iraq and Saudi Arabia, forecasts estimate that they will join Qatar for a 5 per cent economic growth rate in 2011 and about 4 per cent in 2012, driven by natural gas and oil exports.
Oil importers, such as Egypt, Syria and Tunisia, have a much lower forecast at 1.5 per cent in 2011, with a slightly better outlook of 2.5 per cent in 2012, the World Economic Outlook report said.
The report was released in Washington ahead of the IMF's annual meeting with the World Bank on Friday and Saturday. Overall, the IMF noted that the world's most important advanced economies are suffering low growth, exacerbating high government deficits that in turn are destabilizing banking systems and threatening economic growth worldwide, creating what IMF chief economist Olivier Blanchard called 'vicious feedback loops.'
Egyptians and Tunisians were the first two Arab populations to oust their long-time leaders this year, after mass demonstrations took to the streets for weeks in January across the two countries. Shortly afterwards, the wave of popular protests spread to other Arab countries, including Yemen, Libya and Syria.
However, large-scale labor strikes in Egypt and a group suicide attempt of five unemployed men in Tunisia still make headlines eight months later as the two countries struggle to create political and social stability.
The IMF report also said that activity in several economies of the Middle East and North Africa is being adversely affected by social unrest and ongoing conflict, which are weighing heavily on tourism receipts, capital flows, and investment.
According to a recent UN report, political instability in popular tourists spots including Egypt, Tunisia, and Syria prompted a 13 per cent drop in arrivals to North Africa and an 11 per cent fall in the Middle East.
Protesters calling for the ouster of President Bashar al-Assad, which began six months ago, have faced a bloody government crackdown, leaving at least 2,700 people dead, forcing tourists away and triggering a series of sanctions by the US and the EU.
In light of social unrest rocking the region, the report pushed for the need of an 'inclusive medium-term growth agenda that establishes strong institutions to stimulate private sector activity, opens up greater access to economic opportunities.'
A key medium-term objective would mean restructuring fiscal policies that the report claims would reduce poverty and create greater employment opportunities, particularly among the young, which have been the main reasons driving political upheaval in the region.